Heavy Clay

Forterra to modernise Wilnecote site with £27 million investment

13/10/2021

The aim of the UK group’s investment is to bring the facility up to current standards of efficiency and sustainability and increase capacity by 20%

Stephen Harrison

Following a €114 million investment at its Desford site (Leicestershire), UK leading brick manufacturer Forterra is now set to invest £27 million (around €31.8 million) in its brick factory in Wilnecote, Staffordshire.

The investment will modernise the facility, which has been in operation for 30 years, bringing it up to current standards of efficiency and sustainability. With an expected product output boost of 20%, the redevelopment project will include a new kiln, dryers and handling equipment and will allow the factory to create a wider array of high-quality brick products, including increasing production of the famous Staffordshire Blue Brick.

The investment (£2 million in 2021, £12 million in 2022 and £13 million 2023) will offer opportunities for new contracts within the commercial and specifications markets, including larger construction projects such as schools and hospitals.

“In keeping with our strategic focus on manufacturing excellence, our new facility in Wilnecote will allow us to respond to the increasing demand for bricks as the rate of housebuilding continues to accelerate nationwide and crucially balance this with a greater reach into the commercial and specifications markets,” commented Stephen Harrison, CEO of Forterra.

Work on the factory is expected to begin in late 2022 and will be concluded around nine months later in 2023. The group expects the project to deliver an increase in EBITDA of around £7 million by 2027.

The announcement comes after an extremely positive first half of the year that exceeded all growth expectations.

The Group reported revenue of £180.3 million (€212.5 million, up 47.3% on 2020) with revenue generated by sales of bricks and blocks slightly ahead of 2019 levels (£145 million compared to £143.9 million).

EBITDA for the first half of 2021 was £37 million (relative to £8.2 million in 2020 and £42.5 million in 2019), an excellent result considering the operational challenges at the existing Desford brick factory along with one-off costs totalling £1.0m relating to the restructuring of the Bespoke Products business.

Pre-tax profit of £27.1 million compares with a loss of £2.3 million in the first half of 2020.

“The current strong trading conditions appear set to continue in the second half of the year. However, we remain watchful that ongoing economic uncertainty surrounding the longer-term impacts of the pandemic, coupled with the shorter-term effects of the present shortages of labour, materials and transport across the wider sector could potentially impact demand for our products,” added Harrison. “We now anticipate a 2021 full year result modestly ahead of our previous expectations.”

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