Forterra Reports First Signs of Housebuilders Planning to Increase Production

THE FIRST signs that housebuilders may be planning to increase production are signalled in the latest trading statement from Forterra plc.

The company reports “Modestly improved levels of activity through April and into May have improving demand for flooring and foundation products. It provides tentative indications of increasing build rates and improving demand.”

Reported in a statement ahead of its AGM, Forterra plc is the UK’s second-largest brick maker and manufacturer of clay and concrete building products.

Housebuilders Planning to Increase Production

Progressive, the investment analysts, remarked on Forterra’s statement, commenting: “This tallies with our belief that housebuilders have re-entered the land market and plan to increase production as early as Q2.”

Forterra plc says the first recently observed improvement in activity leads it to give a greater weighting towards H2 than previously reported. However, its full year expectations remain unchanged as ‘overall trading conditions remain challenging’.

Forterra’s trading update for the four months up to 30 April 2024 reports trading conditions remained challenging with depressed activity levels persisting in its key markets. This was partly driven by the exceptionally wet weather experienced this spring.

Domestic Demand

Group revenue was 6% below the prior four months, which is consistent with the company’s assessment of demand in the domestic brick market from trade and government data.

Alongside this, imports of bricks to the UK in the first 3 months of the year fell by 24% compared to the prior year, according to HMRC, continuing the decline seen throughout 2023.

Forterra says its continued focus on cost control and commercial discipline have allowed the business to mitigate the impact of lower than expected sales volumes this year.

Neil Ash, Forterra CEO

Neil Ash, Chief Executive of Forterra plc, said: “Whilst the Group continues to experience weak market demand, I am pleased that the decisive rationalisation and cost saving actions we implemented in 2023, along with continued commercial discipline and operational agility, has allowed us to mitigate the effects of a weaker than expected market at the beginning of the year.

“We continue to make progress with our strategic investment projects at Wilnecote and Accrington and the Group remains well positioned to capitalise as soon as our markets recover.”

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