Baggeridge Brick blames fall in demand and high energy costs for 35% fall in profit
Pre-tax profit at Baggeridge Brick has fallen by 35% as demand for bricks hits a 50-year low. The company also blamed ‘abnormally high’ energy costs for a decrease in profit from £5.21m to £3.41m for the year ended 30 September 2006.
The company said that price increases in its Building Materials division had not been enough to offset the sharp increase in production costs caused by high energy costs.
It said that energy costs across the business had risen by more than £3m over the last year and brick demand had fallen 8.7% to 2.414bn. Baggeridge blamed the move from detached houses to apartments for the fall in brick demand.
Chairman Alexander Ward said: “Trading conditions have continued to be tough, but activity in the first two months of the current year have been at a higher level than last year.”
Ward said there was a continuing concern over the increase in national brick stocks and would be closing factories at certain times during the winter period to bring supply back into balance with demand.
The chairman was more optimistic about next year’s energy prices. “Encouragingly the cost of gas is now below that of last year and its price trend has been downwards.”`
Baggeridge said that business in the second half of the year was an improvement over the prior year.
An offer for the business was made by Wienerberger Finance Service in August but the proposed deal has been referred to the Competition Commission by the Office of Fair Trading.