Investing.com — Forterra (LON:) on Thursday presented a cautiously optimistic outlook for the year ending December 31, 2024, highlighting a “modest improvement” in business conditions, particularly towards the end of the year.
Despite difficult economic conditions, the company maintained stable revenues and achieved better-than-expected net debt levels. This was due to effective cash management and operational adjustments.
For the full year, the construction products maker reported revenue of around £345m, above consensus estimates of £362m, 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 the first half and the previous year.
This growth was partly driven by higher sales of concrete products, while brick volumes remained stable year-on-year, in line with broader market trends.
“However, due to market weakness, we believe underlying market volume growth is now expected to be more in the range of around 5% versus 10% previously,” analysts at RBC Capital Markets said in a note. .
Adjusted EBITDA for 2024 is projected to be approximately £50 million, down from £58.1 million in 2023, but consistent with previous guidance.
This reflects the challenging operating environment, particularly in the UK bricks 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 inflows expected to reach around £60 million, a material change from the outflow of £5.3 million in 2023.
These efforts resulted in a reduction in net debt before leases to approximately £85 million, down from £93.2 million in 2023.
This reduction was achieved despite capital expenditure of more than £20 million on strategic projects throughout the year.
Leverage based on banking covenants 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 recognizes that there are challenges in meeting the government’s ambitious housing targets and that broader economic conditions may have an effect on demand.
Upcoming changes to stamp duty in April 2025 are expected to influence housing affordability, further increasing market uncertainty.