Cost cutting and reduced production has helped Michelmersh Brick report a slightly lower interim loss even though revenues were 28% lower.
The brick manufacturer lost £457,000 in the six months to June 2009, compared with a £483,000 loss in the first half of 2008. Revenues fell from £12.5m to £9.1m. Michelmersh’s focus on higher margin, specialist bricks has helped to average selling price of the company’s bricks to increase.
Brick stocks were steady, which is much better than the market as a whole where stocks are rising because of overcapacity. National brick stocks are near to one year’s supply.
Net debt was £18.4m at the end of June 2009. The company’s bank facilities have been renegotiated and last until June 2011.
An application for planning permission for residential development has been submitted for 16 acres - out of 85 acres – at Telford. Persimmon Homes has an option over this land. The plan is to build 170 homes on this land. Michelmersh hopes to have a response from the local authority before the end of this year. If the response is positive that could spark a partial sale of the land, which will help to cut debt.
Charles Stanley forecasts a full year loss of £1.1m.
At 37.5p a share, Michelmersh is valued at £15.2m. The company’s net asset value is £30.5m. The share price has quadrupled in the past six months.
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