DAVY VIEW

Forterra’s trading statement indicates that the group’s pre-tax profits for 2019 will meet Board expectations (which had been lowered in October). As with Ibstock’s recent update, there is a cautious tone in relation to H1 prospects, with the performance expected to be down year-on-year, albeit with a gradual improvement in market conditions. Our sense is that this points to some modest downside risk to current 2020 estimates. Little change in profitability looks like a more plausible outcome compared to current expectations of modest growth (4-5%). This supports our view that the stock looks very much up with events at current levels (near its highest rating since IPO).