Forterra to Mothball Two UK Brick Plants
Given current economic uncertainty and sufficient brick inventory levels, the company is proposing to temporarily mothball two plants.
Forterra plc recently released a pre-close trading update with respect to its half year, which ended June 30, 2016. Overall, the profit for the first half is in line with management’s expectations at the time of the IPO in April 2016. As anticipated, brick sales volumes were weighted toward home builders. Sales to the builders’ merchants have been affected by excess inventory continuing to be held by the merchant sector. The group continued to generate a strong level of operating cash flow; net debt at the end of June was around £20 million (approximately $25.9 million) better than expectations.
Given current economic uncertainty and sufficient brick inventory levels, the board has reviewed the current production plan and has decided to maximize the utilization of its most efficient brick plants and effectively manage its cost base. The company will therefore enter into consultation with employees at its brick factories in Accrington and Claughton, in Lancashire, proposing to temporarily mothball the plants. Both of these brick plants were mothballed between 2010 and 2014, and the company has demonstrated its capability to successfully bring production back online in a short period of time.
Forterra has sufficient brick inventory and production capacity to service customer demand should housing output continue to grow as previously expected. The board continues to believe that in the medium term, the fundamentals driving demand for the company’s products are attractive and is confident that Forterra’s strategy will drive value for shareholders.
For more information, visit www.forterraplc.co.uk.