Forterra plc trading update

Activity in new-build residential sector results in double-digit growth in brick and block volumes

FORTERRA plc say trading in the period from 1 July to 31 October 2017 continued to be underpinned by good activity levels in the new-build residential sector, resulting in double-digit growth of brick and aggregate block volumes for the 10 months to October 2017, compared with the same period last year.

Overall Group revenue for the 10-month period was 12% ahead of last year, after excluding the Bison acquisition, according to the company’s latest trading update.

The Group completed the acquisition of the trade and certain assets of Bison Manufacturing Ltd in September 2017. The integration of the business, which includes the transfer of certain product lines between Forterra’s two existing precast concrete facilities and the new Bison facility, to improve efficiency and maximize potential, is progressing to plan.

The Group’s precast concrete business has been rebranded as Bison Precast, recognizing the strength of the Bison brand in the marketplace.

Meanwhile, following the completion of the investment project at the Group’s Claughton brick facility, in Lancashire, resulting in an increased capacity of more than 5 million bricks per annum (c.11% of the existing plant capacity), production commenced in the second half in line with plans.

A kiln at the nearby Accrington facility has also been relit and the plant is expected to build up to full production utilizing both kilns during 2018.

The Group is continuing to generate a strong level of operating cash flow, which, even after the payment of £20 million for the Bison acquisition and dividends of £13.8 million, has resulted in net debt of £87.2 million at 31 October 2017 compared with £92.3 million at the start of the year.

Based on the good trading performance in the year to date and the company’s forward order book, Forterra’s board says its expectations for the full year remain unchanged.