Brick maker to beat market expectations

BRICK maker Michelmersh is enjoying a strong end to 2014 boosted by the buoyant housing market.

In a pre-close update the company said strong trading conditions had continued late into 2014 and both brick volumes and selling prices were better than expected. As a consequence, it said the group was likely to exceed market expectations for full-year turnover and pre-tax profit.

It said a project to increase production capacity at its Freshfield Lane site was almost complete and would increase the group’s output from the first quarter of 2015.

The announcement came as CRH, the international building materials group, announced it had reached agreement to dispose of its clay and concrete businesses in the UK and its US clay business to funds managed by Bain Capital Europe in a deal worth £414m.

The deal excludes real estate assets with an estimated market value of £30m which are being retained by CRH for future disposal.

The transaction is subject to regulatory approvals and is expected to close in H1 2015.

The UK business comprises brick firm Ibstock, which has several bases in the West Midlands, together with Forticrete and Supreme Concrete. As part of the transaction Bain will assume certain debt and pension liabilities relating to the business and accordingly, the net cash consideration payable to CRH is expected to be approximately £295m.

In 2013, the business generated pre-tax profit of £16m and gross assets of the business at year-end 2013 were approximately £300m.

Dublin-based CRH has said the proceeds will be used for general corporate purposes.