Forterra Plc · LSE:FORT
Forterra — Investor Presentation (May 2023)
21 slides from Forterra's investor presentation, May 17, 2023
Slide 1: Forterra plc: Brick Factory in Europe
FORTERRA PLC BRICK FACTORY INEUROPE 17 May 2023
Slide 2: Disclaimer
This document has been prepared by Forterra plc (the “Company”) solely for use at a Statements in the Presentation, including those regarding the future financial condition, results presentation in connection with the opening of the Desford brick factory on 17 May 2023 (the of operations, business o
Slide 3: Highlights, Financial Review, Our Markets, Strategic Update
Highlights Financial Review Our Markets Strategic Update Chief Executive Officer Former Chief Executive Officer Chief Financial Officer Sustainability Outlook Investment Case 2022 Results Presentation 3
Slide 4: 17 May 2023 programme
17 May 2023 1) Welcome andpresentation 2)06A 3) Group Tours A) Opening ceremony 5) Lunch Time 1000 1030 1100-1200 1200 1220
Slide 5: Wilnecote brick factory refurbishment
Investment cost Bricks annual capacity IRR (20 year) - increasing effective Group capacity £30m by Wilnecote brick factory 22% refurbishment commenced with recommissioning expected in Q4 2023 Incremental EBITDA* ROCE Less carbon per brick relative to old factory £30m Wilnecote brick factory refurbis
Slide 6: Established leading market positions in core products
Established leading market Long-term structural demand Investment pipeline to deliver Commitment to sustainability Strong profitable growth, cash positions in core products and supply factors underpin capacity growth, efficiency and leadership generation and disciplined market growth decarbonisation
Slide 7: Strengthen the core
Strengthen the core Grow capacity, cost efficiency and improved sustainability New Desford Brick Factory Range expansion Access new higher margin market segments Wilnecote Brick Factory Innovation and development Develop and launch new products Brick Slips 7 7 17 May 2023
Slide 8: Products and Markets
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Slide 9: New build housing completions
New build housing completions • Desford’s industry leading efficiency leaves us well placed to benefit from the medium- term fundamentals underlying the UK housing market • 197,000 new build homes estimated to have been completed in Great Britain during 2022 remains below the Government target of 30
Slide 10: Evolving domestic brick market capacity
Evolving domestic brick market capacity • Industry capacity was rationalised during the global financial crisis with Forterra playing the leading role • Despite current and announced capacity investments, the UK brick industry still lacks the capacity required to meet demand ( ) ( ) ( ) Source: Fort
Slide 11: Brick imports focus 22/23
Brick import (MAT) monthly focus 22/23 • Imports currently represent c.24% of the brick market • Imports have fallen sharply in 2023 (Q1 44% lower than Q122) though remain high as % of the market Annual brick import progression since 2005 Source: BEIS, HMRC ] • c.550m bricks were imported into the U
Slide 12: Customer relationships
• Customer focus is one of our core values and many of our customer relationships span decades • We have worked hard to develop strong, mutually beneficial relationships that ensure we are always a preferred supplier • Our £95m investment in capacity is an investment in meeting the needs of our cust
Slide 13: Desford product range
• The Desford product range is well established, and is particularly popular within the housebuilding sector, due to its aesthetics, and relative lightweight features • Desford bricks have good water absorption and ideal void configuration making them preferred by brick-layers as they allow high spe
Slide 14: Sustainability
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Slide 15: Operating sustainably
Operating sustainably is critical to our long-term success as a business and influences everything we do have set out a number of challenging targets across three key pillars: • • • • • • • • • • • • • • • • 17 May 2023 15
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Slide 17: Clay reserves
• Our brick business is built upon our clay reserves and the new Desford factory is a prime example of this • We have access as a Group to over 90m tonnes of clay which on average will sustain our manufacturing operations for 50 years • Our mainstream brick factories are each adjacent to a quarry, e
Slide 18: Short term strategy to maximise output from Desford
• Short term strategy to maximise output from Desford through mothballing less efficient production capacity elsewhere • Fixed cost nature of the brickmaking supports mothballing vs. the output reduction that would be more appropriate in concrete business • [TBC] 43% 57% *To aid comparison, New Desf
Slide 19: Desford project returns and timeline
Undiscounted / IRR (20 year) ROCE Discounted Incremental payback EBITDA Project Project Planning permission Factory 2nd kiln Full Full financial contribution inception announced received commissioned commissioned production run rate achieved 17 May 2023 19
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Slide 21: Desford in numbers
DESFORD IN NUMBERS > — 1,000 C temperatureottnexin ame 39 0 ' 0 0 0 tonnes of clay used in production per year 30 Fyears Clay reserves at the Desford site 58 lorryloads of ricks per day £9om Investment cost 20,000 mfactory footprint 180m annual brick production capacity + hectares of new reed hed ha