Listed brick maker Forterra has reduced its debt burden since float
Britain's second largest brick maker threw-off plenty of cash in the last three months, which the group has used to steadily reduce its lending.
Forterra said in its quarterly trading update that net debt had been reduced to £112m at the end of October. Its net debt to earnings ratio – the number of years of earnings required to pay down lending – fell from 2.2 times, when it listed in April, to 1.7 times.
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Plans are afoot at the firm, formerly known as Hansons, to "de-bottleneck" projects. The board has approved splashing out £6.5m on a couple of new kilns in Desford, Leicestershire and Claughton, Lancashire.
Once up and running, the two sites will extend capacity by 15m bricks a year. Claughton's kiln was turned off in August but will be burning bright by next summer, the company said.
Clyde Lewis, an analyst at Peel Hunt, referred to today's announcement as "reassuring".
"While the shares have bounced sharply since the post referendum sell-off, they are only back to their float price. At this level we continue to see good value," he said.
In a new move, Forterra announced that its staff had keenly snapped up shares in the company. Its October sharesave scheme was participated by 62 per cent of employees.
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Second only in the UK to Ibstock, Forterra floated in April, providing private equity house Lone Star an exit from its investment. Lone Star bought the firm from German giant Heidelberg Cement in March 2015.