Forterra share price rises as brickmaker reports strong activity from housebuilding sector in 2016

 
Oliver Gill
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Brickworks Struggle As House Building Market Stutters
Time for some new ones? Demand is stepping up for brickmaker Forterra (Source: Getty)

Forterra's share price nosed up this morning after the company said it had experienced "strong activity levels" from housebuilders.

Britain's second largest brickmaker posted modest annual growth, which its boss said was "good progress in the delivery of our strategy".

The figures

Revenue rose by 1.5 per cent to £295m while earnings jumped 4.6 per cent to £70.6m.

Profit before tax excluding exceptions was £54.3m, up from £52.3m in 2015.

Operating cash flow jumped nearly 30 per cent to £69.8m.

Read more: Brickmaker Forterra boosted by high housebuilder demand in late 2016

Dividends totalled 5.8p per share.

Why it's interesting

While Britain's construction sector may be in danger of losing up to 200,000 workers from EU countries following Brexit, Forterra's boss Stephen Harrison said it had experience "strong activity levels from the major housebuilders and positive indications from these customers".

In the first half of last year many builders' merchants were struggling to shift bricks and building up stocks. This unwound in the second half of the year. "It appears that the destocking in the builders merchants’ supply chain is now largely complete," said Harrison, and this was good news for a firm hoping to dictate positive pricing changes.

Read more: Forterra cements cash returns

He added: "As anticipated, price increases for the year have now been agreed with most customers in order to cover the increases in the cost base."

What the company said

Chief executive Harrison continued: "Our first annual results as a listed company show good progress in the delivery of our strategy.

"Revenue and profit both increased year-on-year due to a strong performance in the second half as volumes to housebuilders continued at a good rate and the destocking in the supply chain at merchants and distributors eased towards the end of the year.

"2017 has started well, building on the momentum seen in the second half of 2016, with brick volumes for the first two months ahead of last year."

Based on our order book and current levels of activity, the outlook for the first half of the year is good. We have less visibility for the second half of the year, however we anticipate a more balanced outcome between the first and second halves than in 2016.

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