Slide 1: Forterra Plc 2022 Results Presentation
FORTERRA PLC 2022 Results Presentation 9 MARCH 2023
Slide 2: Important notice
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 on 9 March 2023 in connection with the Company’s Results Announcement in of operations, business or other
Slide 3: Agenda
Highlights Financial Review Our Markets Strategic Update Chief Executive Officer Chief Financial Officer Sustainability Outlook Investment Case 2022 Results Presentation 3
Slide 4: Highlights
• Resilient trading delivered strong FY22 results • 2022 brick sales volumes broadly in line with • Dynamic pricing model implemented to ahead of pre-pandemic comparator 2021, primarily limited by capacity constraints recover severe cost inflation • Particularly strong performance from Bison • Energ
Slide 5: Investment projects update
New Desford brick factory now £30m Wilnecote brick factory Contracts signed for £12m facility to operational with first brick despatches redevelopment commenced with manufacture clay brick slips at expected shortly recommissioning expected in Q4 2023 Accrington with first production in H1 2024 Work
Slide 6: Financial Review
2022 Results Presentation 6
Slide 7: Group financial summary
Period ended 31 December * £m 2022 2021 Change Revenue 455.5 370.4 23.0% EBITDA 89.2 70.4 26.7% EBITDA margin 19.6% 19.0% 60 bps Operating profit / EBIT 72.7 54.0 34.6% Profit before tax 70.6 50.7 39.3% Earnings per share (pence) 26.4 17.5 50.9% Cash flow from operations 89.0 81.2 9.6% Net (debt) /
Slide 8: Group income statement
Period ended 31 December* £m 2022 2021 Change Revenue 455.5 370.4 23.0% EBITDA - Bricks and Blocks 85.5 70.5 21.3% - Bespoke Products 3.7 (0.1) Total 89.2 70.4 26.7% EBITDA margin 19.6% 19.0% 60 bps Depreciation and Amortisation (16.5) (16.4) Operating profit / EBIT 72.7 54.0 34.6% Finance expense (
Slide 9: Bricks and Blocks
• Revenues of £370.2m, 24.2% ahead of 2021 Period ended 31 December * (£298.1m) • Sales volumes broadly in line with 2021, limited £m 2022 2021 Change by production capacity and low inventories, with market demand slowing only at the end of the Revenue 370.2 298.1 24.2% year EBITDA before overhead a
Slide 10: Bespoke Products
• Revenue in the year was £90.1m (2021: £76.1m) Period ended 31 December* • Floor beam sales volumes increased 9% on 2021 as we maximised output from the single flooring £m 2022 2021 Change factory Revenue 90.1 76.1 18.4% • Strong result driven by the strength of EBITDA before overhead allocation 9.
Slide 11: Cost base stability
43% • [TBC] Stability appears to be returning to our cost base 57% after 2 years of exceptional inflationary pressure • We are comfortable that current selling prices are currently matched to our anticipated 2023 cost base • At least 80% of our energy secured although with costs ahead of 2022 levels
Slide 12: Cash flow and net debt
• Performance highlights the Group’s continued Period ended 31 December ability to generate strong cash flow, totalling £89.0m, compared to £81.2m in 2021 £m 2022 2021 • Share buyback returned £40m of capital to Operating cash flow before exceptional items 89.0 81.2 shareholders in the period Intere
Slide 13: Capex commitment
Capex commitment £m 2023 2024* Desford 8.9 - Wilnecote redevelopment 20.0 3.0 Accrington brick slip facility 5.0 6.0 Maintenance 14.0 14.0 Total capex 47.9 23.0 *2024 spend may increase if additional strategic projects are announced 2022 Results Presentation 13
Slide 14: Working capital
Accrued and other payables Trade payables Trade and other receivables Inventory 100 • Working capital remains flat year on year 80 • Inventory increase driven by valuation 43 rather than quantity, with low levels of 60 33 inventory persisting at the year end 40 • Inventory build of up to £25m is env
Slide 15: Robust balance sheet
• Robust balance sheet with net debt of only £5.9m At 31 December before leases • £40m drawn against £170m RCF facility at year £m 2022 2021 Change end leaving £130m headroom Cash and cash equivalents 34.3 41.5 (7.2) • £64.2m of capital returned to shareholders in the Loans and borrowings (40.2) (0.
Slide 16: Our Markets
2022 Results Presentation 16
Slide 17: New build housing completions
New build housing completions • 204,000 new homes estimated to have been completed in Great Britain during 2022 • Whilst an increase on 2021 (198,500), this continues to fall short of the recently reiterated Government target of 300,000 new homes annually across the UK • The CPA have forecast an 11%
Slide 18: 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 in this ( ) • Despite current and announced capacity investments, the UK brick industry still lacks ( ) the capacity required to meet demand ( ) • Th
Slide 19: Brick imports
Import progression since 2007 • Total UK brick consumption in 2022 is estimated at 2.5bn bricks of which a record 570m (representing 23% of total market demand) were imported • Illustrative scenario for 2023 shows a 20% fall in demand being at least partially absorbed by imports falling back • Custo
Slide 20: Housebuilder demand indicators
“Visitor numbers and reservation rates Traffic / searches indexed to 100 at 6.00 in January have improved from the 130 5.00 levels in the fourth quarter of calendar 120 year 2022” – Bellway (9 Feb 2023) Nov 2022 4.00 110 3.00 100 % 2.00 “Whilst still early in the year at the 90 start of the Spring s
Slide 21: Strategic Update
2022 Results Presentation 21
Slide 22: Strategic investment projects
Strengthen the core Range expansion Innovation and development Grow capacity, cost efficiency and improved Access new higher margin market segments Develop and launch new products sustainability Desford Brick Factory Wilnecote Brick Factory Brick Slips • £95m investment now operational • £30m invest
Slide 23: Desford brick factory
Strengthen the core Progress and timing • Factory now operational with bricks being manufactured • Second kiln to be commissioned in the spring • First despatches due shortly on completion of product certifications Returns • Designed to provide market leading efficiency • Product range suited to lar
Slide 24: Wilnecote brick factory
Range expansion • Complete redevelopment of existing factory • Focused on the higher value commercial and specification product range including the famous Staffordshire blue bricks • Improved efficiency and 1% increase in factory capacity • Expected capital cost of c.£30m, increased from Sheffield H
Slide 25: Brick slips at Accrington
Innovation and development Project Investment case • Investment at our Accrington facility to enable • UK market for brick slips is currently estimated the manufacture of brick slips at around 120m units annually with significant growth expected in the coming years • c.£12m investment facilitating t
Slide 26: Capital allocation
returned to shareholders in 2022 Continued strong free cash flow will be allocated in line with our capital allocation priorities 1. Strategic organic capital investment to deliver compelling returns final dividend – 2. Attractive dividend policy 2022 total of with a pay-out ratio of 55% 14.7p of ea
Slide 27: Sustainability
2022 Results Presentation 27
Slide 28: Sustainability pillars
• Operating sustainably is critical to our long-term success as a business and influences • everything we do • We have set out a number of challenging targets across three key pillars: • People – we care about the health, safety and wellbeing of our people, their families and the communities within
Slide 29: Solar power purchase agreement
Management site visit to build site Construction ongoing at Tiln, Nottinghamshire • In March 2022 we entered into a 15-year Power Purchase Agreement (PPA) which will see us receive around 70% of our electricity from 2025 from a dedicated solar farm • A long term commitment will provide us with price
Slide 30: Decarbonisation initiatives
Carbon capture • During the year we partnered with a company offering innovative carbon capture technology and are already exploring the deployment of this technology at one of our brick factories Alternative fuel trials • We are progressing the trials of hydrogen and biomass as alternative fuels fo
Slide 31: Outlook
2022 Results Presentation 31
Slide 32: Outlook
• Based on our assumption of an underlying fall in demand of 20% relative to 2022, the Board’s expectations for the Group’s 2023 performance remain unchanged • The underlying decrease in market demand is expected to be mitigated to some extent by substitution of imported bricks, although customer in
Slide 33: Investment case
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 underpins capacity growth, efficiency and leadership generation and disciplined market growth decarbonisatio
Slide 34: Appendix
2022 Results Presentation 34
Slide 35: Balance sheet
Period ended 31 December £m 2022 2021 Change Intangible assets 23.6 17.7 5.9 Property, plant and equipment 233.7 201.4 32.3 Right-of-use assets 18.1 16.5 1.6 Total non-current assets 275.4 235.6 39.8 Current assets Inventories 43.0 32.8 10.2 Trade and other receivables 44.3 39.1 5.2 Cash and cash eq
Slide 36: Forterra plc contact details
Forterra plc 5 Grange Park Court, Roman Way, Northampton NN4 5EA Tel: 01604 707600 2022 Results Presentation