Forterra posts modest trading improvement but cautions on economic uncertainty – Investing.com

Investing.com – Forterra ( LON: ) on Thursday issued a cautiously optimistic outlook for the year ending December 31, 2024, citing a “modest improvement” in business conditions, particularly towards the end of the year.

Despite challenging economic conditions, the company achieved stable earnings and higher than expected net debt levels. This is due to effective financial management and operational adjustments.

For the full year, the building products maker reported revenue of around £345 million, above consensus estimates of £362 million, despite a highly volatile and often challenging market landscape.

The company reported a double-digit increase in revenue for the first half of the year compared to the first half and last year.

This growth is in part due to sales of reinforced concrete products, while brick volumes remained flat year-over-year, in line with broader market trends.

“However, due to the weakness of the market, we think that the growth of the underlying market volume is now in the region of c.5%, rather than 10% before,” RBC Capital Markets analysts said in a note.

Adjusted EBITDA for 2024 is estimated to be around £50 million, down from £58.1 million in 2023, but in line with previous guidance.

This particularly reflects challenging operating conditions in the UK brick market, which remains subdued in 2022 but has shown signs of improvement in the second half of the year.

Forterra reported an improvement in cash generation, with adjusted operating cash flow expected to reach £60 million, a significant change from £5.3 million in 2023.

These efforts have resulted in a reduction in net debt before leases to £85 million in 2023 from £93.2 million.

This reduction was achieved despite more than £20 million of capital expenditure on strategic projects throughout the year.

In June 2024, the leverage on the bank’s covenants declined from 2.3 times to 1.9 times.

Forterra in 2010 He expects a slight improvement in market conditions in 2025, but is cautious due to the uncertain economic outlook.

However, Forterra acknowledges there are challenges to meeting the government’s ambitious housing targets, and broader economic conditions could impact demand.

Changes to Stamp Duty in April 2025 will affect housing affordability, adding to market uncertainty.