Michelmersh Brick (LON:MBH) said its full-year profits will exceed market expectations as it updated on trading.
It said its better than expected performance was aided by operating efficiencies, continued low energy costs and additional capacity from Freshfield Lane, in West Sussex.
The company did add a note of caution to the generally upbeat statement as it said delivery volumes had been below previous expectations as a result of a softening of the market.
However, it added that average selling prices are ahead of those budgeted.
In the six months to June 30, pre -tax profit doubled to £2.5mln on revenues of £15.3mln and it appears this robust performance has carried on into the second half.
The number of bricks sold in that period rose 2mln to 36mln, while the average selling prices of bricks was £422 per thousand, compared to £387 per thousand in the same period last year.
Michelmersh has around 4% of the market and supplied the premium bricks used in St Pancras Station and the terra cotta frontage of Jimmy Choo’s posh shoe shop in London’s Bond Street.
Around 30% of the 70mln bricks, tiles and pavers it supplied last year went into repair and maintenance, with the remainder going into new build projects.
The shares, up 32% in the year to date, succumbed to mild profit-taking as they fell 7% to 94p in late morning trade.
The growth company broker Cenkos pointed out that valuation is underpinned by investment land worth around 26p a share.
It also pointed out that the shares are currently trading at a discount to the FTSE Construction & Materials Index.
Analyst Marcus Tregoning, who rates Michelmersh shares a ‘buy’, has increased his full-year profit forecast by £400,000 to £4.2mln; predicted revenues have been tweaked back to £29.2mln.
“Today’s upgrade primarily relates to operational performance rather than a further improvement in market conditions,” said Tregoning.
“We remain confident that the UK housing shortage, combined with constrained supply supports a positive outlook for Michelmersh.”