Michelmersh Brick Holdings set back by falling prices

Michelmersh Brick Holdings, an AIM listed specialist brick manufacturer and landfill company, have fallen behind on achieving their expected pricing gains in the second half due to average selling prices falling short and a rise in competition.

According to the firm, the UK brick market has been experiencing falling output and a small increase in dispatch volumes as manufacturers respond to market demand.

The board feel a speedy recovery of average selling prices by the beginning of next year is unlikely.

These changes in the materials supply market have led the group to resource the carbon additive used in brick manufacturing at Freshfield Lane. The process has been successful however higher output yield is likely to taper off going forward, in line with historic trends.

The landfill licence for the former Dunton brickworks has been granted and the associated work completed. The board expects an economic return on this asset in the near future.

The board has revised its financial expectations in terms of revenue and profit for the current year to a similar level to the previous period.

On the plus side, cost savings have been identified to help mitigate the effect of negative market trends and the order book remains strong at 5% ahead of that at the half year.

Operational issues at the Michelmersh site at the half year have been resolved to return the sire to its full operational capacity.

Cash flow is “strong” and the group expects to meet or exceed its previous cash expectations at year end.

“The board reaffirms that strong long-term housebuilding and RMI market fundamentals remain in place for the foreseeable future and that the Group is well positioned to grow market share in the coming years,” the group said in a statement.

The share price fell 16.67% to 52.50p at 1008 BST on Friday.