Profit and revenue boost for Michelmersh

Revenue and profit were up at brickmaker Michelmersh in the first half of the year. 

The AIM-listed firm’s interim results, published this morning, showed turnover of £42m for the six months to 30 June 2023, up 23.5% on the same period last year. 

The business, which is supplying bricks for Everton’s Bramley Moore Dock stadium in Liverpool, also reported increased pre-tax profit – up to £6.1m from £5.6m. 

Speaking in March after the release of its full-year results for 2022, chief executive Frank Hanna said the business would avoid further price rises in 2023 “where we can” and speaking to Building again today, he said this remained “absolutely the case”. 

“The one thing that we want to try and bring back to the marketplace for our end users and our customers is pricing stability,” he said, adding that Michelmersh had hedged its energy costs at around 90% for the remainder of the year. 

“So we de risked the energy element of it as much as we possibly can to ensure that we’re holding pricing for longer.” 

As part of its effort to get a handle on energy costs, the business has doubled its solar capacity at its Floren plant in Belgium, with 50% of that facility’s energy requirements to be met with solar this year. 

It is also in the process of installing new panels at its Blockleys factory in Telford, which will be operational by the end of autumn and will produce around 15% of site needs. 

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

Hanna told Building today that the prefab market was “a growth area without a shadow of a doubt” but that there was not a “wholesale move” to these products among its customers. 

Ryan Mahoney, chief financial officer at Michelmersh, said the company was “always looking” for further acquisitions and that there was “quite a lot out there” at the moment due to financial stresses in the industry. 

Addressing the current economic headwinds, Hanna said he wanted to see “inflation stability and normalisation of interest rates” as the year continued.  

“There are challenges next year, but for us as a business what we will try and do is make sure we cover as many sectors of the marketplace as we can […] so we have as broad a portfolio offering as we can.”

He noted that the high-end, luxury housing sector was one of the few areas of the marketplace which was proving robust against the downturn. 

Mahoney said there might be a slight skew toward the first half of the year but anticipated its full-year performance to be in line with HY23. 

An Investec brokers’ note on this morning’s results said Michelmersh’s numbers presented a strong case for a re-rating of its shares. 

“The lowly valued shares suggest that the Group’s strong operational and financial delivery and very robust balance sheet continue to be overlooked by the market,” it said.  

“The strong first half results and outlook comments demonstrate the quality of the business and its ability to act nimbly in difficult markets to deliver good results.”