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Baggeridge hit by sales dip and gas price rises

FINANCE - Brick maker to cut back on production following 50-year low in sales

PROFITABILITY at Baggeridge has been bushwhacked by sales of bricks sinking to a 50-year low and escalating input costs.

A £3 million surge in total energy costs left pre-tax profits at Baggeridge in the six months to September 2006 trailing £1.8 million on a year ago at £3.4 million.

Chairman Alexander Ward said: 'Trading conditions continue to be tough but activity in the first two months of the current year has been at a higher level than last year.

'Concerns remain over the industry imbalance between brick production and sales volumes and the resultant increase in national stocks.

'The industry has taken some steps to bring supply back into balance with demand but we do not yet believe this process is complete. Inevitably in the circumstances we will be taking winter closures at our factories. We have now hedged the price for a significant proportion of our first half gas requirements.'

The results are another blow to Baggeridge, which is led by chief executive Alan Baxter and recently had its £89.2 million acquisition by Austrian brickmaker Wienerberger referred to the Competition Commission.

Interim turnover rose £4.2 million to £55 million and Mr Ward hopes demand for bricks from house builders will rise and input costs drop. He said: 'Encouragingly the cost of gas is now below that of last year and its price trend has been downwards.'

Baggeridge's building materials provides nearly all the profit and income but the landfill division raised operating profits £180,000 to £670,000 on £910,000 turnover - up from £640,000.