19th Nov 2013 10:25
LONDON (Alliance News) - Michelmersh Brick Holdings PLC Tuesday said it has raised GBP10 million by placing 22.2 million shares at 45 pence each, and will use the proceeds to boost output at its Freshfield Lane plant, reduce its debt, for general working capital purposes and look for acquisition opportunities.
The company said it will spend GBP2.5 million to buy new equipment, buy and recondition equipment from elsewhere, and maximise the use of space at Freshfield Lane in order to boost output from the current 30 million units it currently produces each year. It expects output to increase by 6 million units.
"The Placing was significantly over subscribed further emphasising increased confidence in the improving brick market conditions and we would like to thank our existing investors for their support as well as welcoming new institutions to the shareholder register," Chief Executive Martin Warner said in a statement.
Michelmersh said it expects average brick selling prices to increase, meaning its plant expansion will be timely.
"The directors believe the overproduction within brick manufacturing, which has been a feature of the group's competitive market for the last few years, has ceased and surplus stocks held by competitors and customers have been eradicated," it said.
In a trading update, Michelmersh said like-for-like dispatches were up 14% in the first nine months of the year, and all four of its plants are running at capacity. Stocks are down as a result, but prices are so far only marginally up on last year. It has offset higher energy prices by cutting central and administration costs, but still expects to only break even on continuing operations for 2013 as a whole.
"The board expects that industry prices are to increase through 2014 as a result of the end of overstocking and increased demand which will restore the margins achieved. The board continues to explore possibilities to increase contribution through production capabilities both organically and through acquisition," it added.
Michelmersh Brick shares were down 1.9% at 52.25 pence Tuesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Michelmersh Brick Holdings