Despite a drop in revenues and profits, Forterra has hailed a “resilient performance” in the first half of its financial year.
For the six months ended 30 June 2023, group revenues at the manufacturer of clay and concrete building products were £183.2m, a decrease of 17.8% relative to the prior year (£222.8m).
Meanwhile profit before tax decreased from £44.2m to £18.1m.
Forterra noted that the results are “broadly in line with management expectations” and were “delivered against a backdrop of challenging trading conditions.”
Neil Ash, Chief Executive Officer, said: “We are pleased to report a resilient performance in the first half, despite the challenging trading conditions faced in our markets.
“I joined Forterra in the belief that it was a great business with a bright future. This sentiment has been confirmed in the three months since I became Chief Executive Officer. I have been impressed by the dedication, ability and depth of talent of our people, and their desire to continually improve our business.
“To do this we are focusing on three key areas: firstly, customer experience and commercial excellence; secondly, manufacturing excellence; and thirdly, innovation and sustainability. This focus will further strengthen our core.
“After over three years of construction at Desford, and an investment which will total £95m, we were delighted to open the largest and most efficient brick factory in Europe in May. This new factory will deliver a meaningful enhancement to group results for years to come, through additional production capacity, improved efficiency and improved sustainability.
“During the first half we also took the opportunity to rebuild inventory levels allowing us to better serve our customers and meet their expectations. Now done, we have been unafraid to take difficult decisions to ensure our inventory levels do not continue to grow excessively and are aligned to demand.
“As we enter the second half, the outlook continues to remain uncertain due to high inflation and rising interest rates. These factors are likely to continue weighing on demand for new housing and therefore our products.
“So, whilst we presently see tentative signs of improving trading, we are forecasting only a modest improvement in demand in H2 and our recent guidance of a full year 2023 EBITDA with a more balanced H1/H2 split remains unchanged.
“Looking ahead, we are optimistic that the group’s results will benefit from a number of positive drivers including: the efficiency benefits of Desford; an end to customer inventory reduction; the opportunity to substitute imported bricks; stabilising energy costs with approximately 70% of our requirement for 2024 secured; and the cost benefits of our restructuring actions.
“Beyond this, as market conditions normalise, we expect to benefit from the additional capacity offered by Desford along with our other organic development projects at Wilnecote and Accrington.
“In addition, we have a strong pipeline of investment opportunities aimed to capitalise on the medium to long-term market fundamentals of a shortage of UK housing supply, a shortfall of domestic brick production capacity and cross-party political support for increasing housing supply.”
