Brickmaker sees profit and revenue soar

Northamptonshire-based brickmaker Forterra has posted strong results for 2022, with big rises in both turnover and profits.

The firm saw revenue rise by 23% to £455.5m, while profits rose by almost 40% to £70.6m.

Forterra called the trading performance “resilient”. The firm said its new Desford brick factory is now operational with the first brick despatches expected shortly. Its £30m Wilnecote brick factory redevelopment has started with commissioning expected in the fourth quarter of this year.

Outgoing Stephen Harrison, CEO, said: “We are pleased with our strong performance in 2022 against a backdrop of severe cost inflation.

“The short-term outlook for the UK housing market remains uncertain. We saw signs of softening demand towards the end of 2022, and this continued into 2023, partly driven by customer inventory reduction. Whilst we expect demand for our products to fall in 2023 relative to 2022, we are encouraged by falling mortgage rates and recent reports of improving reservation rates. We wait to see how our customers’ spring new house selling season develops, as this will be a key determinant of demand in the current year. Against the continuing inflationary environment we have been able to implement further selling price increases at the beginning of 2023 and secure at least 80% of this year’s energy requirement.

“We remain confident that Forterra is well positioned to face these uncertain times. We began this year with minimal inventory, and are well practiced in managing our production capacity utilisation and cost base. With our new Desford factory now operational, we also expect to benefit from the industry-leading efficiency this will offer, manufacturing a range of products ideally suited to displace imported bricks. Alongside this, we possess a strong balance sheet with minimal debt and have recently extended our credit facility.

“Based on our assumption of a 20% fall in underlying demand relative to 2022, mitigated to some extent by the substitution of imported bricks, the board’s expectations for the group’s 2023 performance remain unchanged. Customer inventory reduction is expected to disproportionately impact H1 performance, resulting in full year revenue and earnings being H2 weighted. In the medium-term we continue to expect to benefit from the attractive UK market fundamentals of population growth, housing undersupply, a shortage of domestically-produced bricks and an increasing focus on the quality of housing stock.”