The shutdown of construction sites across the country dealt a severe blow to revenue for Forterra (FORT) during the first half. Combined with a £16m impairment against assets in areas with more challenging market conditions and weaker margins, that led the brick manufacturer to report a £21.4m operating loss.
However, since the end of June, trading has been stronger than management expected, with sales volumes in July and August coming in at 89 per cent and 82 per cent of levels during the comparable period last year, respectively. As a result, management has guided that full-year adjusted cash profits will come in at between £27m and £32m, which is likely to lead to market upgrades given the consensus forecast sat at £27m.
Nevertheless, the uncertainty ahead, particularly regarding the extent to which demand from the housebuilding sector will be sustained, has led management to embark on a £10m cost savings programme. That includes mothballing its Swadlingcote facility and cutting 225 jobs.
Numis forecasts adjusted pre-tax profits of £8m and EPS of 3p for the full year, rising to £34.6m and 12.2p in 2021.
| FORTERRA (FORT) | ||||
| ORD PRICE: | 188p | MARKET VALUE: | £ 430m | |
| TOUCH: | 188-188.8p | 12-MONTH HIGH: | 376p | LOW: 144p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 59p | NET DEBT: | 59% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 193 | 32.7 | 13.6 | 4.0 |
| 2020 | 122 | -23.3 | -10.3 | nil |
| % change | -37 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
