Continued demand for specialist bricks boosted sales for Michelmersh (MBH) by over a fifth in 2018, helped by the acquisition of Carlton in 2017, which gave the group a broader base of activity.
After the year-end it bought Floren, a Belgium-based clay brick manufacturer, but despite these outlays strong cash flow helped to reduce debt significantly. The group is now within sight of cutting debt to less than adjusted cash earnings.
The benefits of operational gearing came through a record 106m bricks being made, and gross margins grew from 35.4 per cent to 38.9 per cent. Demand for bricks for new-build meant that the number of imported bricks continued to rise. However, until its acquisition, Floren was one of its competitors, thus bringing an added premium.
Trading remains strong, with the group order book at December 2018 the highest on record. The group also continued to diversify its end markets, concentrating on private and social housing, commercial and urban regeneration, repair, maintenance and improvement.
Analysts at Canaccord Genuity are forecasting underlying pre-tax profits for the year to December 2019 of £8.7m and EPS of 7.4p.
| MICHELMERSH BRICK (MBH) | ||||
| ORD PRICE: | 91p | MARKET VALUE: | £84m | |
| TOUCH: | 90-92p | 12-MONTH HIGH: | 101p | LOW: 74p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 69p* | NET DEBT | 19% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 28.5 | 2.6 | 2.7 | 0.5 |
| 2015 | 29.1 | 4.6 | 4.4 | 1 |
| 2016 | 30.1 | 4.6 | 4.4 | 2 |
| 2017 | 37.9 | 3.3 | 2.6 | 2.2 |
| 2018 | 46.3 | 6.4 | 5.8 | 3.2 |
| % change | +22 | +93 | +119 | +49 |
| Ex-div: | 23 May | |||
| Payment: | 28 Jun | |||
| *Includes intangible assets of £23m, or 25p a share | ||||
