Michelmersh Brick’s average selling price slumped in 2010 from £350 per thousand to £330 per thousand. Chief executive Martin Warner said: “Our challenge, as with other manufacturers, is to achieve price recovery. However, I believe this will come as we face up to a future of increasing energy costs.”
The reduction in average price was attributed more to a change in product mix than commercial pressure. In March 2010 Michelmersh acquired Freshfield Lane Brickworks (FLB), whose production is targeted more at the volume brick market than premium products.
Mr Warner said that demand for bricks had fallen 40% in the last five years, from 2.6bn to 1.5bn. “There has been intense acquisition activity and the closure of works, resulting in the majority of bricks now being produced in large manufacturing units. As this process has continued, and I believe that the market has now almost certainly bottomed out, Michelmersh Brick is in a strengthened position.”
In 2010, Michelmersh Brick sold 67mbricks and tiles, up from 50m in 2009. The increase reflects the addition of FLB for nine months of the year and reduced capacity at Blockleys.
Total turnover for 2010 was £23.3m (2009: £17.9m), on which the company made a pre-tax loss of £7.7m (2009: £996,000 pre-tax loss).
Before restructuring costs of £7.4m are factored in, an operating profit of £500,000 was achieved.
Mr Warner said that 2011 had started strongly with orders, sales and production of brick products ahead of budget and increasing demand at the company’s landfill operation.
He added: “We believe that our market share is increasing, and we will continue to compete in the current difficult market by offering quality and range to our chosen markets. We have recently announced our investment in a brick distribution business in the northeast of England that is a strategic move into an area where Michelmersh Brick products have hitherto had limited penetration. There are now few opportunities to acquire one-off manufacturing sites. However, we will continue to consider these as and when they present themselves. More importantly though, the business, its market place, products and team are uniquely placed to play a key role in what will shape the brick industry in the UK, in years to come.
“We are confident that with our good market coverage, enhanced executive management team, careful control of costs and rationalisation completed, we can go forward despite the rigours of the economy.”
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