Brick producer Forterra is considering mothballing two plants due to ‘economic uncertainty’, despite stating its profits are continuing as expected
The Northampton-based company said it was looking to temporarily close its brick plants in Accrington and Claughton, Lancashire.
However, the manufacturer did not mention explicitly whether the review of its current production was related to the UK’s decision to leave the EU.
Forterra said that in the six-month trading period up until the end of June, its profits were as anticipated.
The manufacturer added that it still generated a strong operating cash flow and, while having a net debt of £20 million, this exceeded expectations.
In a statement, Forterra said the move was being considered because of ‘current economic uncertainty and sufficient brick inventory levels’.
It added that the action would allow the company to ‘continue to meet customers’ needs’ and manage costs until it can ‘more effectively forecast demand’.
Forterra runs nine brick manufacturing facilities in the UK with a total production capacity of around 570 million bricks per year.
Yesterday lunchtime, shares in Forterra were down 6.8 per cent to 120p.
Andrew Eagles, chief executive of the Brick Development Association, said: ’There is uncertainty at senior government levels around post-Brexit and leadership of both political parties and that’s causing a bit of uncertainty in terms of construction.
’There’s less certainty in terms of brick numbers for the upcoming couple of months. Those factories can be bought back relatively quickly, so what they’re [Forterra] moving to do is to utilise the more efficient plants where they can expand production when they need to.’
Eagles also noted that the development must also be taken in the context of the latest ONS statistics, which were released this morning.
The statistics show that there was a 3.1 per cent increase in brick deliveries in May 2016 compared to May 2015.
He added: ’What you’ve got is a small blip where Forterra are looking to manage that by mothballing those factories and that is unfortunate.
’But in the longer term, it can scale up with the more efficient factories and then in the medium term you’ve still growth and interest from local government for getting more homes built.’
However, according to separate government statistics, brick production for all types was down for the first three months of 2016 compared to the same quarter last year.
|2015||Brick production in millions (all types)|
|2016||Brick production in millions (all types)|