We believe that UK new build housing production will be boosted by major government initiatives to address under-supply. Brick pricing power should be underpinned by reductions in industry stock levels and import penetration. Forterra’s strong cash generation should boost returns and support dividend growth over our forecast period, in our view.
Forterra is the former UK operation, Hanson Building Products, part of the UK-US conglomerate. It is the UK’s second largest brick producer, selling principally to the UK new build housing and residential repair, maintenance & improvement (RMI) markets. It also manufactures concrete blocks and specialist clay and concrete products. It returned to the stock market in April 2016.