25th Nov 2021 12:18
(Alliance News) - Northhampton-based Forterra PLC on Thursday said it is experiencing strong demand in its third-quarter with year to date brick sales in line with 2019 levels.
The manufacturer of building products said brick sales were up 6% in the four months ended October 31 compared to the same period in 2019, leaving year to date brick sales volumes in line with 2019.
Forterra said it experienced significant cost inflation in the energy, raw materials and transportation categories.
The company secured about 90% of its energy requirement for the remainder of the year and around 60% of its total energy requirements for 2022. For the first quarter of 2022, when the risk of volatility is greatest Forterra said, it has secured about 85% of its energy requirements.
The manufacturer further noted a short term impact on margins, but said selling price increases are expected to benefit margins in 2022.
The company already increased concrete product prices to recover cost inflation and "significant" brick price product increases are secured from the start of next year.
Inventory remained at "very" low levels during the period due to strong market demand and Forterra anticipates strong positive market demand looking into 2022.
The company still noted that business remained broadly capacity-constrained until its Desford brick factory is commissioned.
Nonetheless, it stated expansion projects in Desford and Wilnecote are progressing "according to plan" and commissioning of Desford is expected in the fourth quarter of 2022 within a GBP95 million budget.
"The strong trading seen in the both the housebuilding and repair maintenance and improvement markets in the first half of the year continued into the second half. As expected, we encountered significant pressures across our supply chain in the period, although, due to the agility of our operational management, we have been successful in limiting any disruption," Chief Executive Stephen Harrison said.
"We also experienced meaningful input cost inflation, which has had a short-term impact on margins, however, we are mitigating this through significant selling price increases. Notwithstanding these factors, we continue to anticipate delivering a full-year result in line with management's expectations, with higher than expected revenues offsetting the increased cost base."
At the end of July, Forterra "modestly" upgraded its full-year outlook for financial 2021 due to a strong first-half recovery.
In 2020, the company generated a pretax profit of GBP17.4 million on revenue of GBP291.9 million.
Shares down 1.0% at 251.00 pence each on Thursday morning in London.
By Abby Amoakuh; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
Forterra