Forterra considers mothballing two plants due to 'economic uncertainty'

Producer of manufactured masonry products Forterra said profit was in line with expectations but is considering mothballing two plants due to current economic uncertainty.

The company reported in a six month trading update for the period ending 30 June, that profit was as expected at the time of the Forterra’s initial public offering in April and brick sale volumes were weighted towards house builders as it anticipated.

Forterra said sales to builders’ merchants were affected by excess inventory which was held by the merchant sector.

Forterra said it continued to generate strong operating cash flow and net debt of about £20m by the end of June, which exceeded its expectations.

The Northampton based company said that in light of economic uncertainty it is reviewing its production plan, but it did not mention the Brexit vote of 24 June explicitly.

“Given current economic uncertainty and sufficient brick inventory levels, the board has reviewed the current production plan and has decided to maximise the utilisation of our most efficient brick plants and effectively manage our cost base”.

Forterra said it is considering temporarily mothballing two brick plants in Accrington and Claughton in Lancashire.

“This is a prudent action that will allow us to continue to meet customers' needs while effectively managing our costs and cash position until we are able to more effectively forecast demand.”

Previously the brick plants were mothballed between 2010 and 2014. The company said this demonstrates that it bought them back to production “successfully” in a short period of time.

The company maintained it had sufficient brick inventory and production capacity to service customer demand should housing output continue to grow as expected.

Forterra operates about nine brick manufacturing facilities in the UK with a total production capacity of about 570m bricks per year.

Shares in Forterra were down 6.8% to 120p at 1228 BST.