Forterra H1 2026 Results: Margins Hold as Revenue and Cash Flow Fall

Forterra plc has delivered a resilient first half of 2026, but there is no disguising the difficult backdrop facing the UK building products manufacturer.

Revenue, adjusted profit and cash generation all declined as weak construction demand, wet weather and geopolitical disruption weighed on trading. However, improved margins, price increases and cost reductions helped soften the impact.

Crucially, the Board has left its full-year expectations unchanged. Forterra expects second-half demand to be similar to the first half, supporting a result in line with analyst consensus.

Forterra's H1 2026 key figures

Metric	H1 2026	H1 2025	Change
Revenue	£168.8 million	£195.1 million	-13.5%
Like-for-like revenue	£168.8 million	£186.1 million	-9.3%
Adjusted EBITDA	£27.0 million	£29.9 million	-9.7%
Adjusted EBITDA margin	16.0%	15.3%	+70 basis points
Adjusted profit before tax	£14.5 million	£16.6 million	-12.7%
Adjusted earnings per share	5.1p	5.8p	-12.1%
Adjusted operating cash flow	£8.5 million	£30.0 million	-71.7%
Net debt before leases	£74.5 million	£69.4 million	+7.3%
Interim dividend	1.7p	1.9p	-10.5%

Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, excluding exceptional and adjusting items. It is a commonly used measure of underlying operating performance, although it is not defined under IFRS accounting rules.

The full details are available in the original company announcement.

Weak demand hit sales volumes

Forterra's reported revenue fell 13.5% to £168.8 million. After excluding the Formpave and Bison Bespoke Precast businesses closed during the second half of 2025, like-for-like revenue declined 9.3%.

The group faced exceptionally wet weather early in the year, followed by disruption linked to conflict in the Middle East. Forterra said the conflict increased energy, fuel and transport costs while contributing to higher mortgage rates and wider uncertainty.

UK brick industry despatches fell 8% year-on-year during the five months to May 2026. Forterra's brick volumes declined more modestly, meaning the company outperformed the wider brick market.

That relative strength matters because bricks remain the core profit engine. Forterra benefited from its bias towards extruded bricks, also called wire-cut bricks, which accounted for around two-thirds of its production capacity. Demand for these products continued to outperform soft mud bricks.

The picture was weaker elsewhere. First-half despatches of aircrete blocks, aggregate blocks and precast concrete flooring fell by between 10% and 25%.

Margins were more resilient than revenue

Adjusted EBITDA fell 9.7% to £27.0 million, which was a smaller decline than the reduction in reported revenue. As a result, the adjusted EBITDA margin improved from 15.3% to 16.0%.

This is arguably the strongest element of the update. Forterra benefited from closing unprofitable non-core operations in 2025, while low single-digit brick price increases helped recover underlying cost inflation.

The company also introduced surcharges across its products in response to cost increases associated with the Middle East conflict. It is seeking a further low single-digit brick price increase.

Forterra's energy hedging provided useful protection. Around 80% of its expected 2026 gas requirement was secured at pre-conflict prices, while more than 80% of anticipated demand for the remainder of the year is covered at what management described as competitive pricing.

The company has also restructured management and support functions, targeting annual cost savings of around £2 million. Approximately half of that benefit is expected to arrive in the second half of 2026.

Statutory profit before tax rose 36.9% to £11.5 million, despite the fall in adjusted profit. This mainly reflects a cleaner comparison, as the previous period included energy-related accounting adjustments alongside restructuring costs. The adjusted figures therefore provide a more useful view of underlying trading progress.

Cash flow is the main weak spot

Adjusted operating cash flow fell sharply from £30.0 million to £8.5 million. Working capital increased by £16.5 million, including a £3.6 million inventory build as weaker demand left more finished products in stock.

Finished goods inventories reached £66.3 million at 30 June 2026, compared with £62.7 million at the end of 2025. Management has reduced production to bring output closer to current demand and expects the normal seasonal working-capital reduction to support cash generation during the second half.

Net debt before leases increased to £74.5 million from £55.7 million at the end of 2025. This reflected working-capital movements, seasonality, an accounting policy change for certain cash receipts and £8.5 million spent on share buybacks.

Leverage stood at 1.47 times adjusted EBITDA on the banking covenant basis. That remains below the covenant limit of three times, with Forterra reporting £89.0 million of undrawn capacity under its revolving credit facility.

The £170 million facility was extended after the period end and now runs until July 2030, with a further one-year extension option subject to lender consent. The balance sheet therefore appears manageable, although weaker cash conversion and rising debt deserve attention.

Investment continues despite the downturn

Forterra is still investing for a future recovery. Production continues to ramp up at its Desford brick factory, while commissioning is under way at Wilnecote and the Accrington brick slip facility.

Brick slips are thin sections of brick used to create a brick finish with less material than a traditional brick. Accrington has begun supplying its first projects, while Forterra plans to invest around £2 million in a dedicated cutting facility at Measham. This is expected to become operational in early 2027.

The company expects full-year capital expenditure of around £10 million. It has no major strategic spending committed beyond the completion of Wilnecote, providing some flexibility if market conditions weaken further.

Meanwhile, the £20 million share buyback remains ongoing. Forterra had repurchased and cancelled 5.6 million shares for £8.5 million by the half-year point, with completion expected during the second half.

Dividend reduced in line with earnings

The Board declared an interim dividend of 1.7p per share, down from 1.9p. It will be paid on 9 October 2026 to shareholders on the register on 18 September.

The reduction is broadly consistent with weaker adjusted earnings and the company's policy of targeting two times dividend cover. With cash flow down and the buyback continuing, retaining some financial flexibility looks sensible.

What investors should watch in the second half

Forterra expects second-half demand to remain similar to the first half and continues to target a full-year result in line with consensus. Company-compiled analyst consensus for 2026 adjusted EBITDA is £55.6 million, within a range of £53.1 million to £57.6 million.

There are clear positives. Margins improved, brick sales outperformed the market, energy costs are substantially hedged and annual cost savings of £2 million are being implemented. Recent capacity investments could also provide meaningful operational leverage when demand recovers.

The risks are equally clear. Revenue is falling, non-brick product volumes are particularly weak, cash generation has deteriorated and net debt has increased. Management also admits that geopolitical and domestic uncertainty makes demand difficult to forecast.

For now, the investment case rests less on immediate growth and more on Forterra's ability to protect profitability until construction activity improves. Holding the full-year outlook is reassuring, but second-half cash conversion and inventory reduction will be important tests of that resilience.