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2020 / 2021 Edition

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Forterra announce brick capacity expansion plans

Stephen Harrison

Company planning to invest more than £90 million in redevelopment of brick-making facility at Desford

HAVING completed an evaluation of their options for increasing brick capacity, Forterra have announced that a planning application for the redevelopment of the company’s site in Desford, Leicestershire, is being finalized.

The Desford facility currently has an annual production capacity of 85 million bricks, but the expansion project will involve the construction of a new factory that will be capable of producing up to 180 million bricks per annum.

At an expected capital cost of £90–95 million, the expansion project is anticipated to deliver an internal rate of return, over 20 years, in excess of 15% after tax.

The existing plant will remain operational until the new facility built alongside it is completed. Subject to planning consent being received, it is anticipated that the new plant will be commissioned in late 2021 and that the capital expenditure will be spent over the period 2019–2022.

Forterra say enabling and preparation costs of £1.5 million relating to the project have already been committed and included in the capital budget for the current year. The expenditure will be funded from the free cash flow generated by the business as well as the Group’s existing debt facility.

Commenting on the proposed investment, Stephen Harrison (pictured), Forterra’s chief executive officer, said: ‘The high level of capacity utilization in the UK brick industry, together with the attractive long-term fundamentals on house building supported by government policies, provides a sound basis for this major investment.

‘We have chosen redevelopment of the Desford site as the favoured option of those considered, as it enables us to replace the existing plant with a larger, modern facility, providing both additional capacity and the benefit of a lower production cost. This will give us the flexibility to continue to serve our customers and meet their requirements as the market grows.’

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