Brickmaker Michelmersh has blamed the “challenging” business environment for a 36 per cent drop in pre-tax profit in its latest annual financial results.
But despite the “highly competitive pricing environment”, the London Stock Exchange-listed firm said it remained well-positioned in the medium term.
Sussex-based Michelmersh revealed profit before tax of £8m for the 12 months ending 31 December 2024, down from £12.5m the previous year.
In its preliminary financial results announcement, the firm said difficult market conditions resulted in turnover of £70.1m – a 9.3 per cent decline from the £77.3m recorded in 2023.
“We continue to trade in a very challenging environment,” the firm said, but Michelmersh still “increased [its] market share” last year.
Tony Morris, who replaced joint founder Martin Warner as chair last May, said the firm delivered a “resilient performance” in 2024, even though sector-wide brick delivery volumes declined by a third over the past three years.
“Michelmersh’s outperformance of this broader industry decline has been achieved by growing market share in 2023 and then maintaining those levels in 2024,” he said.
“We expect the fundamental resilience of our business model to support performance going forward, as we continue to trade in challenging market conditions.”
The brickmaker had £6m cash in hand at the end of last year, down from £11m in December 2023.
Michelmersh had no bank overdrafts although it held an undrawn £20m borrowing facility.
Chief executive Peter Sharp, who is stepping down from the role this year, said: “Demand for bricks across the sector has declined over the past 24 months in line with the consumer environment.”
He added: “In response, across the industry, manufacturing capacity of approximately 25 per cent has been mothballed or permanently closed in the UK over this period with uncertainty [over] the point the market will return to 2022 levels.
“However, our ability to address the market’s broad spectrum allowed us to grow our market share over that period as we have outperformed the broader level of decline in despatch volumes.”
Michelmersh was established in 1997. The firm produces more than 122 million clay bricks and pavers every year.
Looking ahead, Morris said: “Against a backdrop of customer concerns about affordability and the elevated interest rate environment, the expected timeline for market recovery continues to face delays.
“However, with the strength of our balance sheet and the significant investments made in our facilities during the year, we are well positioned for 2025 and beyond.”
In its stock exchange announcement, the firm said: “The Past two years of resilient trading have largely been achieved through maintaining a well-balanced forward order book covering a broad range of end-markets”.
It added: “Throughout 2024 our order intake ran ahead of our manufacturing capacity which contributed to a high quality opening forward order book to start our new financial year. This order intake momentum has continued into the first quarter of 2025.”
Last week, fellow building materials supplier Marshalls reported a 77 per cent increase in pre-tax profit in its latest full-year results, despite an 8 per cent fall in turnover.
Government statistics for January, released earlier this month, showed that new housing starts drove a year-on-year recovery in building material deliveries, although levels remained subdued compared with recent years.
Department for Business and Trade data showed that brick deliveries increased by 8.5 per cent in January compared with the same month in 2024, while deliveries of concrete blocks rose by 4.2 per cent on the same basis.