Michelmersh’s 2025 numbers: profits squeezed, dividend steady, CFO to exit
Michelmersh Brick Holdings (AIM: MBH) has posted a tougher set of prelims for the year to 31 December 2025. The headline story is lower profit on broadly flat revenue, reflecting weak construction markets, planned plant downtime, and disruption from integrating its pre-fabrication activities. The Board is holding the dividend and the Company has modest net debt, but the CFO is stepping down, with the CEO taking interim finance duties.
Here are the key figures at a glance. “Adjusted” means the Company’s preferred measure excluding exceptional items and amortisation of acquired intangibles – useful for comparing underlying trends.
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue | £68.9m | £70.1m | -1.7% |
| Gross margin | 34.5% | 35.8% | -1.3pp |
| Adjusted EBITDA | £12.4m | £14.0m | -11.4% |
| Adjusted operating profit | £8.4m | £10.1m | -16.8% |
| Adjusted profit before tax | £8.1m | £9.9m | -18.2% |
| Operating profit (statutory) | £4.7m | £8.2m | -42.7% |
| Profit before tax (statutory) | £4.3m | £8.0m | -46.3% |
| Basic EPS | 4.02p | 6.59p | -39.0% |
| Adjusted EPS | 7.50p | 8.18p | -8.3% |
| Cash from operations | £10.9m | £10.2m | +6.9% |
| Net (debt)/cash | £(0.7)m | £6.0m | £6.7m swing |
| Dividend per share | 4.60p | 4.60p | Unchanged |
Why profits fell: market pressure plus self-help disruption
UK demand steadier, Europe much tougher
Revenue slipped just 1.7%, which is creditable given industry conditions. MBH says UK brick despatch volumes rose at a low single-digit rate and market share was stable versus 2024. However, sector production ran ahead of actual despatches, leaving c. 550 million bricks in inventory across the industry and keeping pricing “highly competitive”.
Belgium was the real drag. Housing activity there is approximately 40% below 2022 levels, and MBH’s Floren brand saw “a significant drop” with despatches and revenue each down about 20%. The Company paused Floren production twice to complete environmental upgrades and yard improvements.
Operational changes hit output
Two major self-help items weighed on earnings. First, Carlton’s extended shutdown and commissioning cut output by three million units – a meaningful headwind that was not recovered in H2. Second, the relocation and closure of the Watlington leasehold site as part of integrating the FabSpeed pre-fabrication business caused interruptions and £1.4 million of exceptional costs. In total, exceptional items were £2.4 million, including £0.4 million tied to exiting the niche Hathern Terra Cotta brand.
Order intake ran ahead of “normalised” manufacturing capacity through 2025 and into early 2026, which is positive. But call-off rates – when customers actually request delivery from existing orders – were inconsistent, reflecting ongoing project uncertainty. That makes production planning trickier and supports MBH’s cautious stance.
Cash generation, hedging and balance sheet: steady hands in choppy waters
Despite lower profit, operating cash conversion improved to 87.9% of adjusted EBITDA (2024: 72.9%) thanks to tight working capital control. Cash from operations rose to £10.9 million. After £5.6 million of capital investment, £2.0 million of share buybacks and £4.3 million of dividends, year-end moved to a small net debt position of £0.7 million from £6.0 million net cash.
Liquidity remains sound: MBH has a £20 million multicurrency facility committed until August 2028 with two potential 1-year extensions. Energy costs are actively hedged – over 75% of 2026 needs are locked, roughly 50% of 2027, with some cover into 2028. That lowers risk in a volatile input-cost environment.
Capital allocation and shareholder returns
The dividend is held at 4.60p, signalling confidence despite the downturn. The Board also executed £2 million of buybacks in the year, purchasing 2,132,427 shares and contributing to about 7% EPS dilution reduction over three years through capital repurchases. On the reinvestment side, MBH spent £5.6 million enhancing sites at Carlton, Floren and Michelmersh, plus installing pre-fab capacity on freehold sites to drive future efficiency.
Board changes: CFO stepping down; CEO covers finance
Rachel Warren is stepping down from the Board with immediate effect due to personal reasons and will leave the Company in May 2026. CEO Ryan Mahoney will assume CFO responsibilities on an interim basis, a role he held between 2021 and 2025. The Board also added industry veteran Darren Waters as an Independent Non-Executive Director, while former CEO Peter Sharp remains as an adviser.
My take: interim dual-hatting is rarely ideal, but Mahoney’s prior CFO experience reduces execution risk in the near term. Investors will want visibility on the permanent finance leadership plan after the AGM.
Operational strategy: broader product set, tighter footprint
Michelmersh continues to back its premium brick positioning and the longer-term structural need for housing and RMI (repairs, maintenance and improvement) work in the UK and Benelux. The Group has streamlined pre-fabrication by moving production to freehold sites – south to Michelmersh and north to Charnwood – and exited the subscale Hathern Terra Cotta line. The switch should lower overheads and simplify operations.
Sustainability work continued too, including Scope 1 and 2 emissions assurance, the first Scope 3 estimate, and site efficiency projects. Floren’s new exhaust scrubber improves environmental performance and extends mineral reserve life, which is strategically useful.
Outlook 2026: growth guided, but pricing likely to stay tough
Management expects 2026 growth relative to 2025, while flagging a “challenging” pricing environment as sector production still runs ahead of despatches. Order intake remains ahead of manufacturing capacity, yet customer call-offs are less predictable, so MBH is keeping production schedules flexible and remains “watchful” about potential further downtime.
On the positive side, the balance sheet, hedging, and cash generation provide resilience. Medium-term fundamentals – housing undersupply, RMI demand, and brick’s enduring appeal – remain encouraging. The dividend stance underlines confidence.
What it means for investors
- Resilient top line, pressured margins: Revenue held up well, but the profit squeeze shows the bite from overcapacity, Belgium weakness and planned downtime. Adjusted earnings fell a manageable 8.3% on a per-share basis; statutory earnings were hit harder by exceptionals.
- Cash discipline is a bright spot: Strong cash conversion, active energy hedging and a committed £20 million facility mean MBH can keep investing and paying the dividend through the cycle.
- Strategic simplification should help: Integrating pre-fab onto freehold sites and exiting low-demand niches should improve efficiency and focus when volumes recover.
- Leadership change brings a question mark: The CEO doubling as interim CFO is workable short term given his history, but investors will look for a clear, timely CFO succession plan.
- 2026 set for improvement, but not a straight line: MBH guides to growth this year, though competitive pricing and unpredictable delivery schedules remain live headwinds.
Bottom line: steady through the trough, positioned for the upturn
This is a classic “investing through the cycle” update. Profits are down for understandable reasons, yet cash generation, a maintained dividend, and targeted capex suggest MBH is keeping its house in order. If order intake converts more reliably and Belgium stabilises, the operational upgrades at Carlton, Floren and Michelmersh should start to show through.
For income-focused holders, an unchanged 4.60p dividend and buybacks are supportive. For everyone else, watch three signals into H1/H2: sector inventory drawdown, call-off normalisation, and progress on a permanent CFO appointment. If those break the right way, Michelmersh should be well placed when the brick cycle finally turns.
