There are few better examples of operational gearing in action than last year's performance from Michelmersh Brick (MBH). For while turnover was up just 2 per cent, operating profits increased by two-thirds to £4.7m. And shareholders have been rewarded with a doubling in the dividend payout.
During the year, the brick manufacturer completed the expansion at its Freshfield Lane site and pushed total brick production up by 3 per cent to 69.5m. Crucially, continued strong demand allowed Michelmersh to push through price increases of an average 9 per cent, which together with a tight control on costs - down 9 per cent - helped to lift gross margins from 30.6 per cent to 38.2 per cent.
Cash generation was also significantly improved and allowed the group to repay a £5m loan ahead of schedule and to cancel the borrowing facility with ABN Amro. It has negotiated a revolving credit facility with Barclays to provide operating cash headroom, but there have been no drawdowns as yet, and there was a net cash position at the year-end.
Analysts at Cenkos are forecasting adjusted pre-tax profits for 2016 of £5m and EPS of 4.9p (from £4.7m and 4.6p in 2015).
| MICHELMERSH BRICK (MBH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 78.5p | MARKET VALUE: | £64m | |
| TOUCH: | 77-80p | 12-MONTH HIGH: | 110p | LOW: 65p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 61p | NET CASH: | £2.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 24.3 | 0.5 | 2.6 | nil |
| 2012 | 23.0 | 0.4 | 0.5 | nil |
| 2013 | 25.9 | 0.4 | 0.2 | nil |
| 2014 | 28.5 | 2.6 | 2.7 | 0.5 |
| 2015 | 29.1 | 4.6 | 4.4 | 1 |
| % change | +2 | +75 | +63 | +100 |
Ex-div: 26 May Payment: 30 Jun | ||||
