Brickmaker Forterra cites reduced housing demand as earnings slump

Brickmaker Forterra said demand fell in July and August as the uptick in sales it saw earlier in the summer fizzled out as the slump in house building continued.

In a third quarter trading update, the firm said it now expected full year earnings to be below previous expectations on the back of reduced demand. It had previously expected a “modest” improvement in its second half performance but the firm said it now expected the split between the first half and second to be more even.

Forterra admitted: “The signs of market improvement seen in May and June did not continue into the second half with market demand deteriorating in July and August.”

It said that official figures showed brick despatches were 16% lower in July and August than June while the number was 28% lower for the same period last year.

And it added that it expected demand next year to be similar to 2023, warning that it would put the brakes on how many bricks it produces. “We will look to align production output with this level of sales, thereby limiting further inventory growth.”

In interim results announced this summer, the firm said revenue was down 18% to £183m for the six months to June with pre-tax profit falling 59% to £18m.

In its 2022 results, the brickmaker reported revenue of £456m, a rise of 23% on the number it posted in 2021, and a pre-tax profit of £73m, up 28% from £57m.

Meanwhile, construction materials distributor Brickability has bought cladding installation and remediation contractor Topek for £45m.

In a trading update, Brickability said revenue for the six months to September would be 8% down to £324m in the wake of the housing slowdown. Earnings are broadly expected to be in line with expectations at around £24m.