Forterra report strong end-of-year trading
Strong trading seen through September and October continued to end of year, exceeding expectations
IN a trading update issued today (26 January) for the year ended 31 December 2020, manufactured masonry product producers Forterra plc report that strong trading seen through September and October continued through to the end of the year, exceeding expectations.
Brick and block revenues for November and December combined were 6% higher than the corresponding period in 2019, taking full-year Group revenues to approximately £290 million.
As a result, Forterra expect to report 2020 EBITDA and pre-tax profit (both stated before exceptional items) of approximately £37 million (an increase on our previous guidance of at least £34 million) and £16 million respectively.
Moreover, the year ended with a better-than-expected liquidity position, with net cash of approximately £15 million demonstrating successful management of working capital as well as reflecting some rephasing of payments on the Desford brick factory project.
As at 31 December 2020, the Group had access to committed credit facilities of £170 million, of which £155 million was undrawn.
Project spend on the construction of the Desford brick factory in 2020 amounted to £20 million, bringing the total to approximately £32 million against the project budget of £95 million. Planned commissioning of the factory is said to remain on track for late 2022.
Looking ahead, the steady improvement in trading through the second half of 2020, along with recent positive statements from Forterra’s customers, are said to provides growing cause for optimism, although uncertainty remains.
The company says the impact of the current Stamp Duty holiday coupled with the impending tapering of the Help to Buy scheme on underlying patterns of demand is unclear. Additionally, the wider economic implications of the UK’s new trading relationship with the EU and the longer-term economic impact of the COVID-19 pandemic remain uncertain.
Nevertheless, the board believes that the Group remains well placed to benefit from a sustained recovery of its key markets, with a structural under-supply of housing in the UK continuing to support long-term demand, and the strength of the company’s balance sheet offering resilience against any further challenges in the shorter term.
Forterra intend to issue their full year results announcement on 9 March 2021.