Forterra (FORT) H1 2024 earnings summary

Executive summary

• Group revenue for H1 2024 was £162.1 million, down 11.5% year-over-year, reflecting weak UK brick market demand and industry despatches down 9%.

• Adjusted EBITDA fell 21.9% to £24.3 million, with adjusted PBT down 52.6% to £9.1 million; results were in line with expectations due to disciplined cost control.

• Net debt before leases increased to £101.2 million, equating to 2.3x adjusted EBITDA, but leverage remains within covenants and cash performance was stronger than expected.

• Interim dividend declared at 1.0p per share, reflecting a temporary 40% payout ratio.

• Management remains confident in medium-term prospects, supported by strategic investments and government focus on housing.

Financial highlights

• Revenue: £162.1m (down 11.5% year-over-year); Adjusted EBITDA: £24.3m (down 21.9%); Adjusted PBT: £9.1m (down 52.6%).

• Adjusted EPS: 3.2p (down 54.9%); Statutory EPS: 4.3p (down 35.8%).

• Operating cash inflow improved to £13.3m from a £16.3m outflow in the prior period, driven by disciplined working capital management.

• Net debt before leases at period end was £101.2m, with leverage at 2.3x EBITDA, within covenant limits.

• Interim dividend: 1.0p per share (down 58.3%).

Outlook and guidance

• Full-year 2024 adjusted EBITDA is expected to be around £50 million, reflecting continued challenging conditions.

• UK brick dispatches for 2024 are forecasted to be lower than 2023, but H2 decline is expected to moderate versus H1.

• Management is prioritising cash and working capital over short-term efficiency; further capex reduction expected in 2025.

• Board remains confident in long-term prospects, citing government support for increased housing supply and a target of 1.5 million new homes.

• Guidance for full year net debt remains broadly unchanged, with year-end leverage expected around 2x.