Brick firm Michelmersh hoping to avoid further price rises in 2023, says boss

Brick firm Michelmersh is hoping to avoid further price rises in 2023, the company’s chief executive has said.

The beginning of the year saw the AIM-listed firm, which is supplying bricks to Everton’s new stadium at Bramley-Moore Dock, increase its prices for the third time in just over a year in the wake of soaring energy price rises following Russia’s ongoing invasion of Ukraine.

Chief executive Frank Hanna said Michelmersh would avoid further hikes “where we can”.

He added: “One of the things we want to do as a business this year is give some stability to our customer base in terms of our pricing,” he said, explaining the company’s decision to hedge 90% of its energy needs for the year ahead. “It is very difficult as a consumer of construction materials to work in an environment where energy is driving inflation.”

Michelmersh saw revenue increase 15% to £68.4m in 2022, with pre-tax profit up slightly from £9.7m in 2021 to £11.4m.

In November, the firm acquired FabSpeed, an offsite brick product manufacturer, for an initial £6.25m.

“There was a lot of revenue going out of the door that we were missing out on by not having a specialist offsite fabrication,” he said, adding that the acquisition of FabSpeed gave it “control of our destiny”.

He said demand from pre-manufactured brick products had risen in the wake of the Grenfell Tower fire. “Particularly after the remedial work that is being done after the Grenfell inquiry, panelised brick systems are a great cladding material because they have got an A1 rating over 18 metres for fire retardancy, so we are picking up a bit of work there,” he said.

But he said off-site manufacturing was “not the silver bullet everyone thinks” and that it would continue to play a smaller part in the firm’s portfolio.

Michelmersh’s revenue last year was evenly split between new build residential, repair and maintenance and non-residential and specification.

Hanna said new housing numbers would fll for much of this year with a recovery only returning in the final quarter and the beginning of 2024.

But he said the greatest impact would be on large national housebuilders, rather than the regional developers that form Michelmersh’s main client base.

Analysts at Canaccord Genuity are expecting Michelmersh’s turnover to be £83.5m this year with pre-tax profit coming in at £12.8m.