Forterra (LSE:FORT) has warned investors that full-year earnings (adjusted EBITDA) will come in at around £50m, below consensus of £54.8m, as a deeper slump in UK brick demand squeezes profitability.
The London-listed manufacturer of clay and concrete building products said group revenue for the ten months to 31 October fell 11.9% year-on-year on a like-for-like basis to £282.7m, a steeper decline than the 9.3% drop reported at the half-year stage.
UK brick industry despatches for the nine months to 30 September were 11% below the prior year, worsening from an 8% decline in the first half, with demand in the repair, maintenance and improvement market remaining subdued alongside new-build housing.
Forterra said it has maintained its brick market share and kept underlying selling prices broadly in line with management expectations, while managing production across all product categories to limit inventory build-up and exposure to unhedged gas costs; approximately 80% of its gas requirement for the 2027 financial year is already secured.
The company is on track to deliver about £1m of cost savings in the second half, equivalent to £2m annualised, as previously announced.
Forterra expects aggregate proceeds of approximately £12m by year-end from the disposal of two surplus land assets, subject to completion, and said its £20m share buyback programme should finish in December after repurchasing 12.05m shares for £17.7m as at 31 October.
The board now expects leverage of approximately 1.9x, and said inflationary price increases will take effect from January 2027, though profitability will stay constrained by the fixed cost base without a meaningful recovery in volumes.
Forterra called the government's Your First Home scheme "a welcome development" for the housing market over time, but said its delayed introduction in April 2027, combined with continued pressure on housing affordability and consumer confidence, means market conditions are expected to remain challenging in the near term.
The board said it remains confident in the group's medium-term prospects, citing recent investment in additional production capacity, a resilient balance sheet and committed facilities to 2030 as positioning it to benefit when demand recovers.