Michelmersh confident after year of growth

Specialist brick manufacturer and fabricator Michelmersh reported a 15% rise in revenue in its final results on Wednesday, to £68.4m, while its gross margin decreased slightly to 39.4%, down 1.3 percentage points.

The AIM-traded firm said its operating profit grew 17.2% in 2022 to £11.6m, and profit before tax rose 17.5% to £11.4m.

Basic earnings per share were ahead 44.8% at 9.41p.

Cash from operations increased 24.7% to £19.7m, and net cash was 37.7% higher at £10.6m.

The dividend per share rose 16.4% to 4.25p.

Adjusted EBITDA, meanwhile, grew 13.6% to £16.7m, while adjusted operating profit increased by 14.4% to £12.7m.

The company’s adjusted profit before tax was 14.7% firmer at £12.5m, and adjusted earnings per share increased 13.7% to 10.61p.

Michelmersh’s strategic and operational highlights included the earnings accretive acquisition of FabSpeed, a leading brick-fabricator and manufacturer of off-site pre-built brick products, for initial consideration of £6.25m, completed in November.

The company also worked with partners to implement price increases in the year, to mitigate ongoing elevated inflation rates.

Michelmersh said it was focussed on managing its production efficiency and cost base to maintain EBITDA margins in line with 2021.

The firm said it generated strong and consistent operational cash, supporting capital investment focused on incremental output improvements.

Michelmersh declared a final dividend per share of 2.95p, as part of its progressive dividend policy.

The firm said it expected its diverse end markets to underpin resilience, with a broad customer base from new housing, commercial, architectural specification, and repair, maintenance, and improvement markets.

It said it had a “high-quality” opening order book for 2023, with order intake momentum continuing in the first quarter.

Energy price hedging was also in place, with over 90% of the company’s expected requirements secured for 2023, within budget parameters.

“I am very pleased to report on another successful year for the group, with the ongoing delivery against our strategy supporting our positive 2022 financial performance despite the challenging economic environment,” said chairman Martin Warner.

“We were delighted to announce the acquisition of FabSpeed towards the end of the year and this addition will enable us to strengthen our position as a leading business in both clay and pre-fabricated products.

“We remain mindful that there are significant challenges in the broader economy with elevated inflation and a higher interest rate environment potentially impacting demand across the construction industry.”

Warner said the company was continuing to closely monitor such risks, but believed in the fundamentals of its strategy of maintaining a broad customer base across multiple end markets, seeing “robust levels” of order intake as a result.

“The group continues to focus on delivering excellent products and customer service and with the resilient fundamentals of our business the Board remains confident in the strategic outlook of the business.”

At 1431 BST, shares in Michelmersh Brick Holdings were up 3.3% at 94p.

Reporting by Josh White for Sharecast.com.