Michelmersh Brick Shares Tumble as Profit Drops Amid ‘Highly Competitive Pricing Environment’

Michelmersh Brick Holdings PLC (LON:MBH), a specialist brick manufacturer, reported its half-year results for the six months ended June 30, 2025, revealing a mixed performance against a backdrop of challenging market conditions.

Despite revenue growth, profitability metrics declined, though the company reaffirmed its commitment to shareholder returns. However, the company's shares have fallen more than 9% following the report on Tuesday.

Revenue edged up 1.1% to £35.8 million, compared to £35.4 million in the same period last year, driven by increased UK despatch volumes.

However, operating profit decreased by 26.8%, falling to £3.0 million from £4.1 million. Profit before tax also declined by 29.3% to £2.9 million. Basic earnings per share decreased from 3.37p to 2.47p, a drop of 26.7%.

Adjusted EBITDA decreased by 18.1% to £5.9 million, while adjusted operating profit fell 24.5% to £4.0 million. Adjusted profit before tax decreased by 26.4% to £3.9 million, and adjusted earnings per share dropped by 22.9% to 3.30p.

Cash from operations improved significantly, rising to £3.2 million from £0.9 million. Net cash decreased to £1.5 million from £4.1 million.

Despite the profit declines, Michelmersh has declared an interim dividend of 1.60 pence per share, consistent with H1 2024.

Driver Breakdown:

• UK Outperformance: Michelmersh continues to outperform the UK market in despatch volumes.
• European Challenges: Difficult market conditions in Belgium, with a 20% decline in housing activity, significantly impacted revenue and despatches in the Floren region.
• Strategic Investments: A £3.8 million capex investment focused on efficiency improvements across manufacturing facilities, though a temporary shutdown impacted H1 profits.

Tony Morris, Chair of Michelmersh Brick Holdings PLC, noted the ongoing uncertainty in the recovery of the wider UK construction industry and Belgium brick markets.

“Given the scale of the investment to improve the production efficiency across our facilities over the last 12 months, the additional two-week shutdown at Carlton has impacted our profit metrics in the first half,” he stated.

“As we move into the second half of the year, we are now seeing a normalised operational cadence in the UK which is supporting our commercial focus on maintaining momentum in our order intake and balanced order book.”

The company anticipates that its full-year performance for FY25 will be broadly reflective of its FY24 financial performance, before returning to growth in 2026. This suggests a cautious outlook, with an emphasis on navigating current market conditions and capitalizing on future opportunities.

The company is currently seeing resilient momentum in its order intake, adding that it continued to run ahead of manufacturing volumes.