11th Nov 2024 13:17
(Alliance News) - Forterra PLC on Monday said it is on track to achieve 2024 guidance, as revenue falls year-to-date amid challenging trading conditions.
The Northampton, England-based manufacturer of clay and concrete building products said year-to-date revenue at October 31 was 5% lower than the previous year.
"Against this, we have maintained both our pricing discipline and robust cost control, leading to an adjusted Ebitda in the period broadly in line with the board's expectations," Forterra commented.
Forterra said trading conditions remained challenging in the four months to October 31. Brick despatches were similar to the prior year, but there was increase in demand for its concrete products.
The company maintained its full-year 2024 expectations for adjusted earnings before interest, tax, depreciation and amortisation of around GBP50 million, down 14% from GBP58.1 million in 2023.
Chief Executive Officer Neil Ash said: "The board is encouraged by the new [UK] government's policies that aim to deliver a significant increase in housing supply, and also from improving affordability as the benefits of reducing interest rates are felt. Overall, we believe we are well positioned to benefit from an improving market outlook."
Forterra does however anticipate "modest levels" of cost inflation heading into 2025, driven by increases to employers' National Insurance contributions, contained in the recent UK government budget.
As a result of a recent GBP140 million strategic investment programme, the company has expanded its brick making capacity by 15% alongside broader efficiency improvements.
The refurbishment of its Wilnecote brick factory is almost complete with a return to production scheduled for 2025 following a two-year shutdown, while the commissioning of a GBP12 million brick slip facility in Accrington is underway.
"This cost-effective investment will be the UK's first large-scale domestic brick slip manufacturing facility, capable of producing 50m extruded brick slips per annum," Forterra explained.
Forterra added that it now holds sufficient inventories to meet customer demand with the ability to increase output "quickly and efficiently" if necessary.
Assuming market conditions return to those seen in 2022, the company believes investment in new capacity will help it achieve Ebitda of approximately GBP120 million in the medium-term improving from statutory Ebitda of GBP44.1 million in 2023.
Forterra shares were up 1.1% at 190.00 pence each in London on Monday afternoon.
By Elijah Dale, Alliance News reporter
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