Further evidence of the pick-up in demand for building products came with full-year results from Michelmersh Brick (MBH). Last year the brick manufacturer doubled operating profits to £2.8m - a record since the group floated in 2004.
Tellingly, the revival in the building sector and a run down in the 1.1bn brick mountain built up during the recession allowed Michelmersh to push brick prices up by 13.5 per cent after six years of stagnation. Strong cash generation of £2.6m was supplemented by the sale of the second of three tranches of land to Bovis (BVS) for £1.5m. This had two positive effects: net debt was halved to a nominal £2.1m, and dividend payments were reinstated after a gap of seven years. With a further £1.5m tranche due in October, Michelmersh should soon be debt free, and is expected to double the dividend this year.
The group recently completed a 20 per cent expansion project at its Freshfield Lane site that will extend production by 6m bricks. Planning consent has also been secured for additional clay extraction at the Michelmersh site, but even without this the group has reserves equivalent to 30 years of output.
Analysts at Cenkos expect adjusted pre-tax profits of £3.8m and EPS of 3.7p (from £2.9m and 3p in 2014).
| MICHELMERSH BRICK (MBH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 71.5p | MARKET VALUE: | £58m | |
| TOUCH: | 70-73p | 12-MONTH HIGH: | 77p | LOW: 57p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 58p | NET DEBT: | 5% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 23.3 | -7.7 | -9.8 | nil |
| 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 |
| % change | +10 | +539 | +1411 | - |
Ex-div: tba Payment: tba | ||||
