When Martin Warner brought Michelmersh Brick (LON:MBH) to the Alternative Investment Market in 2004, he had already built the business into the largest producer of handmade bricks in the UK. Since starting the business in the late 1990s, Warner and Chairman Eric Gadsden have built a portfolio of niche players supplying local markets and now oversee a group that owns most of the top-end brick makers in the country. Indeed, it was one of Michelmersh’s divisions, Charnwood Forest Brick that supplied the facing bricks for the regeneration of the prestigious Grade 1 listed London St Pancras Station. He believes the company is now well placed to grow in a market that is expected to see significant shifts in power among the industry’s main players in the near future.

Last year there were 1.35 billion bricks produced in the UK – a near halving of the 2006 figure of 2.5 billion. The country’s house building sector, which collapsed during the economic downturn and remains constrained by a depressed market for mortgage lending , has been largely responsible for that decline. According to forecasts by the Construction Products Association, construction of private housing is expected to grow by 62% over the next three years. However, until 2013, the country will still be building less than half the homes needed to meet the number of new households created each year. And despite growth each year, private housing construction in 2015 will still be 14% lower than 2007’s pre-recession levels. All this has put pressure on the country’s large volume brick manufacturers – including Hanson (owned by owned by Heidelberg Cement), Wienerberger and Ibstock (owned by CRH (LON:CRH) ).

Talk in the industry is that Heidelberg may be preparing Hanson for disposal – a situation which is of significant interest to Michelmersh. After starting with Dunton Brothers in 1997, Warner and Gadsden went on to acquire Michelmersh Brick, Charnwood, Blockleys, Taperell Taylor, Hathern Terra Cotta and fifteen months ago snapped up Freshfield Lane. The group’s operations are now generally focused on delivering products to more economically robust markets in the south-east of England. In tandem, it is also exploring ways to achieve value from its various clay pits, either by selling them to house builders or for landfill. Last year, group turnover increased by 30% to £23.3 million but…

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