Brick maker Michelmersh defies construction downturn as investors net bumper payout
Brick maker Michelmersh has announced a bumper payout for investors this year after defying a wider downturn in the UK construction sector.
The Sussex-based company hiked its dividend by 5.9 per cent to 4.5p, as pre-tax profits rose 8.1 per cent to £12.5m. Earnings per share increased just under 11 per cent to 10.44p.
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased 6.6 per cent to £17.8m, ahead of market expectations.
Shares jumped over five per cent this morning.
The strong performance comes despite ongoing challenges throughout the UK’s construction industry. Interest rate hikes and inflation have pummelled the alongside delays to major infrastructure projects such as HS2 and the Lower Thames Crossing.
The construction sector saw a five per cent fall in new work in the final quarter of 2023, with total construction output also decreasing 1.3 per cent, according to the Office for National Statistics (ONS).
Aim-listed Michelmersh, though, has enjoyed significant growth in recent years. The group’s annual brick output has increased from 70m to 122m, while the company has delved into the European market with its Brecht-based offshoot Floren.
Martin Warner, Chairman of Michelmersh Brick Holdings, said: “I am very pleased to report on another positive year for the Group, with strong growth across our key financial metrics despite the decline in the broader construction industry.
“We enter 2024 watchful of the interest rate environment and inflation trends and how these affect the timing of the anticipated increase in construction activity levels. Whilst we continue to closely monitor the impact from these macro cycles, we believe in our business model, maintaining a broad customer base across multiple end markets, and continue to see robust levels of order intake as a result.
“As ever, the group continues to focus on delivering both excellence in product and customer service and with the resilient qualities of our business model the board remains confident in the strategic outlook of the business.