Michelmersh (MBH) exceeded market profit expectations in the first half of 2019, as the brick manufacturer saw prices boosted by a shortage in the supply of its key product. Management expects the latter trend to continue for the rest of the year, which given the group's progressive dividend policy should feed through to an improvement in the final payment.
UK like-for-like revenue rose 8.6 per cent, supplemented by £2.2m in turnover from Belgian manufacturer Floren, acquired in February. Joint chief executive Frank Hanna says that, like the UK, the Benelux region is operating at “full capacity”. The group is also considering branching into wider European markets. With efficiency and margin improvements ever at the front of mind, phase one of the replacement project at the Carlton plant was completed, including the automation of the kiln unloading process.
Net cash generation more than doubled and helped cut net debt further, which management aims to reduce to below one times annual adjusted cash profits.
Analysts at Canaccord Genuity upgraded their adjusted pre-tax profit and EPS forecasts for the year to December 2019 to £9.2m and 7.8p, respectively, raised from £8.7m and 7.4p.
MICHELMERSH BRICK (MBH) | ||||
ORD PRICE: | 93p | MARKET VALUE: | £86m | |
TOUCH: | 91-94p | 12-MONTH HIGH: | 99p | LOW: 74p |
DIVIDEND YIELD: | 3.5% | PE RATIO: | 14 | |
NET ASSET VALUE: | 75p* | NET DEBT**: | 20% |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 23.1 | 2.86 | 2.55 | 1.06 |
2019 | 27.2 | 4.03 | 3.36 | 1.15 |
% change | +17 | +41 | +32 | +8 |
Ex-div: | 5 Dec | |||
Payment: | 10 Jan | |||
*Includes intangible assets of £22m, or 24p a share **Excludes £1.3m in lease liabilities |