Revenue Increases 11% for Forterra in 2018
Forterra’s 2018 brick production increased by 13% compared with 2017.
Forterra plc recently announced revenue of £367.5 million (approximately $479.8 million) for the year ended December 31, 2018, an increase of over 11% compared to the prior year. Brick production increased by 13% compared with 2017, reflecting full-year production at Claughton and Accrington, as well as the benefits of increased capacity achieved through debottlenecking investments.
“2018 was a year of good progress for the group, with a strong performance from the Bricks and Blocks businesses and the integration of Bison gaining traction following a slow start,” said Stephen Harrison, CEO. “We also approved a £95 million [~ $124 million] investment to build a new brick manufacturing facility that will increase our existing capacity by 16%.
“Trading in the current year has been in line with our expectations. The improvement in productivity seen at Bison Precast in the last quarter has been sustained into the first two months of 2019, and the business is performing well. As anticipated, price increases have now been agreed with most customers in order to cover the increase in our cost base.
“Based on our current order book and indications from major customers, the board’s expectations for 2019 are unchanged. Whilst we are watchful of the impact of the current political and economic uncertainty on our end markets, the board remains confident that the business is well positioned to take advantage of the attractive market fundamentals in order to continue delivering sustainable shareholder value.”
According to Forterra, the UK brick market has continued to perform strongly, with high levels of capacity utilization across the industry due to the sustained increase in new housing output over the last few years. Brick imports have increased to help satisfy market demand and now represent over 16% of the total UK brick market. The overall fundamentals of the market continue to be favorable, supported by the government’s commitment to further increase new residential construction.
In this context, the board approved the previously mentioned investment to build a new extruded brick factory at Desford in Leicestershire with an annual production capacity of up to 180 million brick. It is anticipated that planning consent will be received this year and that the new plant will commence full production during 2022. Once completed, the new factory will replace the existing facility at the site, which currently has a capacity of 85 million brick per year, thereby increasing the company’s total brick capacity by 16% while also reducing the average cash cost of production.
The capital investment program at the Accrington facility was completed on schedule during the year, resulting in an increase in capacity of 10 million brick per year. The four debottlenecking projects highlighted at IPO have now all been implemented, resulting in a total increase in brick capacity of around 40 million brick per year at a capital cost of under £9 million (~ $11.8 million).
Additional details are available at http://forterraplc.co.uk.