Decline in demand hits profits at masonry products giant
East Midlands-headquartered masonry products manufacturer Forterra says it increased its revenues by 3.4 per cent last year – but the company also saw its pre-tax profits decline significantly.
Although the listed firm’s revenue jumped from £367.5 million to £380 million thanks to the success of its bespoke products division, its statutory profits took a £6.6 million hit, sinking from £64.8 million to £58.2 million.
In a statement to the London Stock Exchange, the firm attributed the slump to a downturn in demand in the second half of the year brought on by the climate of political uncertainty.
CEO Stephen Harrison said: “The first half of the year saw strong demand for our products, which slowed in the second half as the impact of political and economic uncertainty weighed on consumer confidence. The general election result in December should provide greater political certainty in the future.
“Demand for our products is driven by housebuilding activity. As enabling works such as access roads and drainage generally need to be completed on new housing developments before our products are required on site, we typically experience some lag in demand following an increase in housebuilding activity. We remain optimistic that demand will recover through the year although this may take some time given an extremely wet winter.
“Therefore, as stated in January 2020, the Board continues to expect the challenging market conditions experienced in the second half of 2019 to gradually improve but anticipates that the Group’s performance in the first half of 2020 will be below that achieved in the first half of 2019.
“Whilst the Board remains watchful of any further political and economic uncertainty, our investment in the new Desford brick manufacturing facility, which will be the largest brick factory in Europe, reflects confidence in our ability to capitalise on the attractive market fundamentals and to deliver sustainable shareholder value over the medium term.”
