Investing.com — Forterra (LON:) on Thursday provided a cautiously optimistic outlook for the year ended December 31, 2024, noting a “modest improvement” in trading conditions, particularly towards the end of the year.
Despite the challenging economic conditions, the company maintained stable revenue and achieved better-than-expected net debt levels. This was due to effective cash management and operational adjustments
For the full year, the building products manufacturer reported revenue of about £345 million, above consensus estimates of £362 million, despite a highly dynamic and often challenging market landscape.
The company reported a double-digit increase in revenue during the second half of the year compared to both the first half and the prior year.
This growth was driven in part by stronger sales of concrete products, while brick volumes remained flat year-on-year, in line with broader market trends.
“However, due to market weakness, we think underlying market volume growth is now expected to be more in the c.5% range vs. 10% previously,” said analysts at RBC Capital Markets in a note.
Adjusted EBITDA for 2024 is projected to be about £50 million, a decrease from £58.1 million in 2023, but consistent with previous guidance.
This reflects the challenging operating environment, particularly in the UK brick market, which remains below 2022 levels but showed signs of improvement in the second half of the year.
Forterra also reported an improvement in cash generation, with adjusted operating cash inflow expected to reach around £60 million, a substantial turnaround from the £5.3 million outflow in 2023.
These efforts resulted in a reduction in net debt before leases to about £85 million, down from £93.2 million in 2023.
This reduction was achieved despite capital expenditures of over £20 million on strategic projects throughout the year.
Leverage on a banking covenant basis decreased to approximately 1.9 times from 2.3 times in June 2024.
Forterra anticipates a modest improvement in market conditions in 2025, but remains cautious due to the uncertain economic outlook.
However, Forterra acknowledges there are challenges in meeting the government’s ambitious housing targets, and broader economic conditions may have an effect on demand.
The upcoming changes to Stamp Duty in April 2025 are expected to influence housing affordability, further increasing market uncertainty.
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