Strong full-year 2022 result with Group well positioned to withstand continuing uncertainty
IN a trading update for the year ended 31 December 2022, clay and concrete building products manufacturers Forterra plc have reported a strong performance with full-year 2022 result expected to be slightly ahead of management’s expectations and above pre-pandemic comparators.
Whilst full-year sales volumes across brick and block products were broadly in line with 2021, full-year revenue of c.£450 million in 2022 was around 21% ahead of 2021 (£370.4 million).
Forterra implemented a dynamic pricing model to recover cost inflation with cumulative brick selling price increases during 2022 of c.50%, with further price increases delivered in January 2023. The Group also saw continued strong operating cash generation with closing net debt of less than £10 million (excluding leases) after c.£30 million of strategic capital expenditure and £40 million share buy-back.
Commissioning of Forterra’s Desford brick factory is still ongoing with bricks now being fired and the first sales anticipated in the first quarter of 2023, following completion of the necessary product certifications.
Forterra chief executive Stephen Harrison commented: ‘We are pleased with our strong performance in 2022 against a backdrop of severe cost inflation.
‘There is considerable uncertainty as to the outlook for the UK housing market and accordingly demand for our products in the coming year. We did see signs of softening demand towards the end of 2022, and we are waiting to see how our customers’ spring new house selling season develops, as the outcome of this is likely to be a key determinant of demand for our products during 2023.
‘We remain confident that the Group is well positioned to face this more challenging environment. The UK brick industry is ideally placed to displace imported products should demand fall, and with our new Desford factory we expect to benefit from the industry-leading efficiency this will offer. Alongside this, we retain a strong balance sheet with minimal debt.
‘In the medium term, we continue to expect to benefit from the attractive long-term UK market fundamentals of population growth, housing undersupply, a shortage of domestically produced bricks and an increasing focus on the quality of housing stock.’
Forterra intend to issue their full-year 2022 results announcement on 9 March 2023.