Forterra falls further as credit metrics deteriorate

Published June 15th, 2017

Nasdaq-listed water pipe manufacturer Forterra, Inc. suffered a further blow last Friday as Moody’s Investors Service changed the outlook on the company’s B1 junk credit rating to negative.

The move followed a drastic downturn in the company’s credit metrics after its first-quarter results showed zero organic top-line growth in its core businesses, while its EBITDA margin plummeted to 2.9%, versus 12% in 2016.

“We expect Forterra to continue to struggle during the next quarter or two before it achieves operating results similar to those obtained in 2016,” wrote Moody’s analyst Al Urbina.

While the change in outlook takes into account Forterra’s significant scale and stable position in the residential and infrastructure markets in North America, there is growing concern that the company’s recent penchant for acquisitions has left it with a high measure of indigestion.

Forterra’s market capitalisation has shrunk by more than two thirds in the past month alone.