Revenue declined by 86% and 62% respectively through April and May, and, the company is now preparing for a prolonged impact on UK building sector.
() told investors it is encouraged by a gradual increase in despatches, as its customers restart their operations.
The masonry products firm noted that its daily dispatches of brick & block products have recovered to around 50% of the level seen in the comparative period of 2019.
It said that group revenue declined by around 39% in the first five months of 2020, and, for the months of April and May the year-on-year drop was marked at 86% and 62% respectively.
The numbers are broadly in line with figures revealed separately today by industry peer Ibstock.
Forterra noted that manufacturing operations are underway now in twelve of its eighteen facilities, and, it is prepared to increase further as demand requires. It expects to restart most of its remaining facilities by the end of July.
The company entered the coronavirus (COVID-19) crisis with £43.2mln of net debt (as of December 31) and it retains a £150ml revolving credit facility which is presently fully drawn. It had £79mln of cash at the end of May, plus a £10mln undrawn overdraft, and it has been confirmed as eligible for the UK’s Covid Corporate Financing Facility.
Restructuring, mothballing and job cuts
Forterra is now launching a restructuring amid an anticipated decline in medium-term demand.
Economic and industry forecasts suggest a prolonged impact on the UK economy and specifically the construction sector, the company noted. It added that Construction Products Association estimates envisages a recovery in residential construction during 2021, albeit output is still expected to be 20% lower in 2021 than in 2019.
To restructure its operations the company intends to consult with its employees about proposed changes to shift patterns and other changes, including a possible consolidation of concrete flooring manufacturing to its Hoveringham site in Nottinghamshire. Among other impacts, it would see the mothballing of a flooring manufacturing facility in Swadlincote, Derbyshire, once existing order books are completed. Overall,
it will result in 225 job losses, mainly from the concrete products facilities.
Nonetheless, the company commented: “Despite the economic circumstances created by Covid-19, the Board remains confident that the Group is well positioned to take advantage of the attractive long-term market fundamentals in order to continue delivering sustainable shareholder value.”