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Diversification: Michelmersh sells bricks in numerous sectors
Brick makers have also suffered from the problems in the real estate market. In most years, Britain uses around two billion homegrown bricks.
Last year, weak demand caused this figure to drop by a third to 1.35 billion. Big companies are feeling the pain. Results have fallen sharply and they are concerned about the coming months.
Michelmersh Brick Holdings is different. Last week the company revealed an increase in turnover and profit, a 6 percent increase in dividend and an expression of confidence in the future.
Unlike some in the industry, Michelmersh sells bricks in many sectors.
The group is positioned as a top quality supplier and includes breweries, churches, luxury offices and award-winning venues such as the Black Country Living Museum in the West Midlands and the International Rugby Experience in Lancashire.
Eton School uses Michelmersh stones, Claridge’s also uses them, as do many top housing developments.
Although it produces 125 million bricks annually, the group is smaller than many rivals, allowing it to adapt more quickly to changing conditions. CEO Peter Sharp understands the importance of service, ensuring products look good, arrive on time and leave customers satisfied.
Sharp has been in the brick industry for almost 35 years and has run Michelmersh for the past eight years with fellow long-time brick maker Frank Hanna.
Hanna leaves for pastures new, but Sharp is considered a steady hand on the tiller, which Michelmersh can steer well on his own.
Brokers expect turnover of £82m this year, profits of £13.4m and a dividend of 4.5p, with solid growth forecasts for 2025.
Midas judgment: Midas recommended Michelmersh in 2015 when they were 70.5p. Today they cost £1.04, a testament to the group’s resilience. However, there is plenty of room for further gains, making the shares attractive to new and existing investors.
Traded on: Goal ticker: MBH Contact: mbhplc.co.uk or 0844 931 0022