Forterra has hailed “strong” 2022 results, with revenue and profits growing against a backdrop of severe cost inflation.
The brickmaker posted revenue of £455.5m, up from £370.4m in 2021, while profit before tax increased to £70.6m from £50.7m.
The firm’s new Desford brick factory is now operational, with first brick despatches expected shortly, its £30m Wilnecote brick factory redevelopment has commenced with recommissioning expected in Q4 2023, and contracts have been signed for a £12m facility to manufacture clay brick slips with first production in H1 2024.
Stephen Harrison, Chief Executive Officer, said: “We are pleased with our strong performance in 2022 against a backdrop of severe cost inflation.
“The short-term outlook for the UK housing market remains uncertain. We saw signs of softening demand towards the end of 2022, and this continued into 2023, partly driven by customer inventory reduction.
“Whilst we expect demand for our products to fall in 2023 relative to 2022, we are encouraged by falling mortgage rates and recent reports of improving reservation rates. We wait to see how our customers’ spring new house selling season develops, as this will be a key determinant of demand in the current year.
“Against the continuing inflationary environment we have been able to implement further selling price increases at the beginning of 2023 and secure at least 80% of this year’s energy requirement.
“We remain confident that Forterra is well positioned to face these uncertain times. We began this year with minimal inventory, and are well practiced in managing our production capacity utilisation and cost base.
“With our new Desford factory now operational, we also expect to benefit from the industry-leading efficiency this will offer, manufacturing a range of products ideally suited to displace imported bricks. Alongside this, we possess a strong balance sheet with minimal debt and have recently extended our credit facility.
“Based on our assumption of a 20% fall in underlying demand relative to 2022, mitigated to some extent by the substitution of imported bricks, the Board’s expectations for the Group’s 2023 performance remain unchanged.
“Customer inventory reduction is expected to disproportionately impact H1 performance, resulting in full year revenue and earnings being H2 weighted. In the medium-term we continue to expect to benefit from the attractive UK market fundamentals of population growth, housing undersupply, a shortage of domestically-produced bricks and an increasing focus on the quality of housing stock.”
