Falling delivery volumes weighed on brickmaker Michelmersh (MBH) and shares in the £82 million cap are 6.4% lower at 95p despite reporting that a better than expected trading performance in the second half of the year to 31 December 2015 would mean that full year profit before tax was likely to exceed market expectations.
Supporting this expected beat are a combination of factors including further operating efficiencies, continued low energy costs as well as additional capacity from the group's Freshfield Lane facility.
Michelmersh blames softening market conditions for the lower delivery volumes but assures the market that this has been more than offset by average selling prices being ahead of those budgeted.
The update has prompted an upgrade from Cenkos Securities with a full year 2015 profit before tax of forecast of £4.2 million compared to the previous forecast of £3.8 million and earnings per share of 4.1p.
Analyst Marcus Tregoning maintains that the upgrade 'relates to operational performance rather than a further improvement in market conditions. We remain confident that the UK housing shortage, combined with constrained supply supports a positive outlook for Michelmersh.' Cenkos has a price target of 100.5p. Shares in the brickmaker have advanced 34.5% since the start of the year.