3rd Jun 2020 10:02
(Alliance News) - Forterra PLC on Wednesday said trading in the five months to the end of May declined significantly year-on-year as it announced restructuring plans expected to lead to the loss of 225 jobs.
The FTSE 250-listed masonry products firm said that while daily despatches of its brick and block products have now recovered to around 50% of the levels recorded in 2019, revenue to the end of May had been significantly hurt. Revenue for the five months ended May 31 declined by 31% year on year, with April revenue diving by 86% and May revenue down by 62%.
Forterra noted economic and industry forecasts which indicate that although the UK residential construction market will recover in 2021, output in 2021 is expected to be around 20% lower than in 2019.
The Northampton-based company is therefore taking steps to restructure its operations in line with the expected decline in demand. Proposed steps include changing shift patterns, consolidating the manufacture of all precast concrete flooring products at its Hoveringham facility in Nottinghamshire, and adjusting the size and structure of support roles.
The proposed measures would lead to the loss of around 225 jobs, primarily from its concrete products facilities, Forterra said.
Manufacturing is currently ongoing at 12 of its 18 facilities with production at most of its remaining facilities expected to restart by the end of July.
"Despite the economic circumstances created by Covid-19, the board remains confident that the group is well positioned to take advantage of the attractive long-term market fundamentals in order to continue delivering sustainable shareholder value," Forterra said.
As at May, the company had cash of GBP79 million and access to an overdraft facility of GBP10 million. Additionally, it now has access to GBP175 million under the UK government's Covid Corporate Financing Facility.
The Covid Corporate Financing Facility is designed to help larger firms to maintain liquidity amid disruption caused by the Covid-19 pandemic, through the purchase of short-term debt in the form of commercial paper.
Forterra stock was trading 5.2% higher at 219.30 pence each on Wednesday morning in London.
By Ife Taiwo; [email protected]
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