Forterra sees modest improvement in trading, but warns of economic uncertainty Investing.com
Investing.com — Forterra (LON: ) on Thursday gave a cautiously upbeat outlook for the year ending Dec. 31, 2024, noting a “modest improvement” in trading conditions, particularly towards the end of the year.
Despite challenging economic conditions, the company maintained stable revenues and achieved higher than expected net debt levels. This was due to effective cash management and operational adjustments
For the full year, the building products maker reported revenue of around £345m, above consensus estimates of £362m, despite a highly dynamic and often challenging market landscape.
The company reported a double-digit increase in revenue during the second half of the year compared to the first half and the prior year.
This growth was partly driven by stronger sales of concrete products, while brick volumes remained unchanged compared to the previous year, in line with broader market trends.
“However, due to market weakness, we think underlying market volume growth is now expected to be more in the c.5% range versus 10% previously,” RBC Capital Markets analysts said in a note.
Adjusted EBITDA for 2024 is forecast to be around £50m, down from £58.1m in 2023 but in line with previous guidance.
This reflects a challenging operating environment, particularly in the UK brick market, which remains below 2022 levels but has shown signs of improvement in the second half of the year.
Forterra also reported an improvement in cash generation, with adjusted operating cash inflow expected to reach around £60m, a significant turnaround from an outflow of £5.3m in 2023.
These efforts resulted in a reduction in net debt before leases to around £85m, down from £93.2m in 2023.
This reduction was achieved despite capital expenditure of over £20m on strategic projects throughout the year.
Bank contract leverage decreased to approximately 1.9 times from 2.3 times in June 2024.
Forterra predicts a modest improvement in market conditions in 2025, but remains cautious due to the uncertain economic outlook.
However, Forterra acknowledges there are challenges in meeting the government’s ambitious housing targets, and wider economic conditions may weigh on demand.
The upcoming changes to the tax levy in April 2025 are expected to affect housing affordability, further increasing uncertainty in the market.
