As one of the UK’s leading brick makers, Forterra (FORT) is making the most of the steady rise in new housing completions, putting its 575m-a-year brick capacity to work. Progress in its first full trading year since flotation has been impressive, with very strong cash flow allowing a sharp increase in the dividend payout, as well as a one-third reduction in net debt to £60.8m.
In view of the increase in demand, steps have been taken to improve efficiency and increase capacity, with improvements on four sites to boost capacity by 40m bricks a year. The last of these projects is being undertaken this summer. The group is also looking at the possibility of building new brick manufacturing capacity either on brownfield sites owned by the group, or by redeveloping existing facilities. An announcement on this is expected in the next few months.
Capacity constraints in precast concrete products were eased with the acquisition of Bison Manufacturing for £20m in September 2017, and sales from the date of purchase have already reached £5.8m. As expected, price increases were successfully pushed through, more than covering increased costs associated with sterling’s weakness.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to December 2018 of £67.5m and EPS of 26.9p (from £61.1m and 24.5p in 2017).
| FORTERRA (FORT) | ||||
| ORD PRICE: | 296p | MARKET VALUE: | £593m | |
| TOUCH: | 295.5-297p | 12-MONTH HIGH: | 308p | LOW: 194p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 52p | NET DEBT: | 58% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013** | 226 | 1.5 | na | nil |
| 2014** | 268 | 33.4 | na | nil |
| 2015** | 290 | 22.2 | na | nil |
| 2016 | 295 | 37.1 | 13.8 | 5.8 |
| 2017 | 331 | 59.3 | 23.8 | 9.5 |
| % change | +12 | +14 | +72 | +64 |
| Ex-div: | 14 Jun | |||
| Payment: | 5 Jul | |||
| **Pre-IPO figures | ||||
