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Sat February 27 2021

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Brick shortages 'worst in living memory'

21 Jul 14 The rising price of bricks helped producer Michelmersh Brick Holdings to increase its profits in the first half but there is little happening there to aid shortages in the construction industry.

Brick prices have risen 13% this year
Brick prices have risen 13% this year

In fact, stocks are now said to be “at their lowest level in living memory”.

Michelmersh sold 34 million bricks in the first six months of 2014, down from 35.2 million in the first half of 2013. But the average selling price was up 12.8% to £387 per thousand.

This meant that its half-year turnover grew 8% to £13.6m (2013 H1: £12.6m) and operating profit was £1.4m (2013 H1: £0.1m).

With much reduced finance costs, last year’s first-half pre-tax loss of £300,000 became a pre-tax profit of £1.3m.

Cost of production increased only marginally, with energy costs staying steady, gross profit margin increased to 33% for the period.

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Chairman Eric Gadsden said that construction industry recovery was now spreading nationwide. “In the first half of last year the focus was very much on London and the South East, and whilst this remains an important long-term market for us, we have seen a spread of new work and RMI sector improvements at a national level. In addition we are continuing to gain quality new orders in Scotland and grow our market position there.”

He added: “The brick industry is benefiting from rising demand and we have now seen for the first time since 2008 signs of increased national brick prices with stocks at their lowest level in living memory. “

However, he said that there was little that brick producers could do in the short term to ramp up output to meet demand.

“Capacity in the industry is largely fixed and can only be increased through significant investment and the availability of appropriate consented mineral reserves, which requires long term planning,” he said. “Margins are still not at a level where the industry is enjoying normalised levels of return on capital such that there is adequate return for new investment in this vital industry. Brick manufacturing in the UK is in a state of flux as a result of the forces created by the long awaited reduction in national stocks, now at historic low levels, and improvement in demand against the backdrop of long-term under investment in the industry.”

Last week Wienerberger announced plans to increase its UK brick production capacity by 200 million bricks by the end of this year. (See previous report here.)

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