Michelmersh: Profit sags at brick maker but order book hits multi-year high ahead of building boom

Brick maker Michelmersh reported a decline in operating profit during the first half of 2024 as economic uncertainty and high interest rates hit housebuilding.

Michelmersh’s operating profit fell to just £4.1m in the first half of the year, down 32.8 per cent from the first six months of 2023, the group disclosed in its half-year results this morning.

Revenue at the Sussex-based company took a less severe hit, but still dropped 15.7 per cent, down to just £35.4m.

Net cash fell by almost two-thirds over the last year, leaving the group with just £4.1m on hand.

The company increased its interim dividend by 6.7 per cent to 1.6p.

Michelmersh has suffered over the past two years as construction output has slumped, which has, in turn, hit demand for construction materials such as bricks.

However, Michelmersh said the decline was in line with management expectations, and the company attributed its relative resilience to “the diversity of our end markets”.

It also added that demand had picked up in recent months and had hit a level “not seen since 2022” as builders geared up for a building boom driven by the new government’s plan to build 1.5m new homes over the next five years.

Michelmersh chair Tony Morris said: “As we move through the second half of the year, we will continue to actively manage our input costs, whilst focusing on maintaining the positive momentum we are seeing in our balanced order book, which is at levels not seen for the past 24 months.”

“With the strength of our balance sheet and net cash position, we are positioned well to trade through the ongoing challenging market conditions and as a result expect our second half performance to be broadly in line with our interim results,” Morris added.