Profit before tax to be “modestly below” last year’s £64.8m result, says Forterra

Image courtesy of Forterra

Forterra, the Northamptonshire brick maker, has issued a trading update covering the period from 1 July 2019 to date, highlighting weakening sales and the expectation that profit before tax will be be “modestly below” last year’s result of £64.8m.

The company said that while volumes into the new build housing market have remained broadly in line with plan, trading in relation to distributors and non-residential applications has slowed. The brick maker added that “key indicators such as UK national brick sales volumes, construction output, new housing starts, housing transactions and consumer confidence also point to further uncertainty in macroeconomic conditions.”

Forterra continued: “The Group’s sales volumes have been affected by this recent weakening of activity, with brick and block volumes down in line with the overall market. Precast concrete sales have slowed in recent weeks despite good growth earlier in the year. Whilst a sustained improvement in productivity has now been achieved, the Bison precast business is unlikely to deliver the level of margin growth anticipated in the second half as a result of delays in a number of large contracts.

“As a result of the above factors, and recognising the current macroeconomic uncertainty, the Board now expects profit before tax to be modestly below last year’s result (2018: £64.8m).

“The Group continues to generate strong operating cashflows to support capital investment and the previously announced increased dividend payout. Construction of the new brick facility at Desford, at an investment of £95m, is progressing to plan with site clearance completed and work commenced on preparing the building foundation. As previously indicated, the new plant is expected to commence full production during 2022.

“Despite the short term political and economic uncertainty, the Board remains confident in its strategy and believes that the business is well positioned to benefit from attractive market fundamentals over the medium term.”