Forterra (FORT) H2 2024 earnings summary

Executive summary

• Revenue remained flat year-over-year at £344.3m, with H2 and Q4 showing strong growth in the UK brick market and Q4 dispatches up 20% year-over-year.

• Adjusted EBITDA reached £52.0m, slightly ahead of guidance, despite a 10.5% year-over-year decline.

• Cash flow from operations rebounded to £60.1m from a £5m outflow in 2023, enabling net debt reduction to £84.9m and leverage at 1.9x EBITDA.

• Major CapEx projects at Desford, Wilnecote, and Accrington progressed well, positioning the business for market recovery.

Financial highlights

• Revenue was £344.3m, down 0.6% year-over-year; H2 revenues up 12% compared to H1.

• Adjusted EBITDA margin was 15.1%, down 170bps year-over-year due to cost inefficiencies and lower capacity utilization.

• Adjusted operating profit was £31.2m, down 18.1%; adjusted PBT was £22.1m, down 28.9%.

• Adjusted EPS declined 33.3% to 7.6p; statutory EPS rose 33.9% to 8.3p.

• Dividend per share was 3.0p, reflecting a 40% payout ratio and down 31.8% year-over-year.

Outlook and guidance

• Trading in early 2025 continued positive Q4 trends, with brick volumes/despatches up 17% year-over-year and an improving order book.

• Expectation of steady market recovery in 2025, with housing starts forecast to grow 11% in 2025 and 12% in 2026.

• Board targets annual EBITDA of £120m as market returns to 2022 levels and strategic investments deliver full benefit.

• CapEx expected to be £15m in 2025, mainly for project completions.

• Plan to return to a 55% dividend payout policy as soon as 2025.