A trading update from Forterra, manufacturer of clay and concrete building products, reveals that its expectations for the year remain unchanged, based upon a 20% underlying fall in market demand this year.
“Whilst industry brick despatches fell 32% relative to the prior year in the three months to the end of March, we continue to expect market conditions to improve as the year progresses,” Forterra said. “We believe the levels of inventory reduction within our customer base have been a major factor in our year-to-date performance and expect this to ease going forward.”
The fall in demand – which is down to interest rates going up, making mortgages more expensive, slowing down the housing market – means that brick imports have begun to fall sharply, reducing by 45% relative to 2022 in the first quarter.
“Our expectations for the year are based upon an underlying fall in market demand of 20% relative to 2022. With the inventory reduction within our customer base still ongoing, the decline in demand we have seen in the period is greater than 20%. However, we do expect demand will improve as the year progresses, noting the improving conditions cited by the housebuilders over recent weeks.
Production at Forterra’s new Desford brick factory continues to ramp up and the old factory ceased production as planned at the end of March. The official opening celebrations for Desford take place tomorrow, 17th May 2023.
The Desford factory will increase Forterra’s production capacity from 80 million bricks per year to 180 million. In addition, manufacturing innovations will enable the new factory to emit approximately a quarter less carbon dioxide per brick than the old factory, the company claims.
However, with the new factory becoming operational at a time of subdued demand, Forterra now intends to mothball its Howley Park brick factory as part of measures to cut overheads by around £10m a year.
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