Profits at Michelmersh Brick (MBH) rose sharply at the half year to June, boosted by a contribution from Yorkshire-based brick manufacturer Carlton. Demand for bricks also continued to outstrip supply, and the forward order book was 10.5 per cent ahead of the previous year at 67m units.
There was little change in selling prices, although some of its larger peers have indicated their intention to pass on cost inflation to customers. However, it’s worth pointing out that with such a bespoke range, average selling prices at Michelmersh command a 35 per cent premium over ordinary bricks.
Underlying cash profits grew by 87 per cent to £5.6m after adjusting for higher operating expenses. Some of this reflected redundancy costs at the Michelmersh plant which was closed, and the hand-made brick production migrated to its Charnwood plant. New housing continued to increase demand, but the repair, maintenance and improvement sector accounts for around a half of the special bricks made by Michelmersh, and business here was also strong as more home owners opted to improve their existing properties.
Ahead of these results, analysts at Cenkos were forecasting adjusted pre-tax profits for the year to December 2018 of £8.8m and EPS of 8.2p (from £6.4m/6.1p in 2017).
| MICHELMERSH BRICK (MBH) | ||||
| ORD PRICE: | 91.5p | MARKET VALUE: | £79m | |
| TOUCH: | 90-93p | 12-MONTH HIGH: | 103p | LOW: 78p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 30% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 16.2 | 1.38 | 1.35 | 0.7 |
| 2018 | 23.1 | 2.86 | 2.55 | 1.06 |
| % change | +43 | +108 | +89 | +51 |
| Ex-div: | 13 Dec | |||
| Payment: | 11 Jan | |||
| *Includes intangible assets of £23.5m, or 27p a share | ||||
