Michelmersh Brick Holdings, the country's largest producer of handmade bricks, slid into a pretax loss in the half-year to end-June through higher energy costs and temporary plant closures.
The company, which owns Telford-based Blockleys, said it expects the rest of the year to be "challenging".
Profitability for the year will be lower than in 2005.
In the six months, Michelmersh saw turnover rise 10.3 per cent to £10.1 million from £9.2 million in the same period last year, yesterday's figures showed.
Sales volume stayed 33.2 million units with average selling price up ten per cent. There was good news on net assets which grew 38 per cent to £43.5 million after an option agreement with Persimmon on 60 acres at the Telford site.
Net asset value per share is now 114.4p, up from 82.2p in 2005, shares yesterday fell 6.5p at 112p.
Chairman Eric Gadsden described the first half as "somewhat turbulent" for the industry, which has seen further energy rises and a reduction in demand.
To neutralise, as far as possible, the effects of rises in energy costs, the group made the decision to reduce output over the winter months, when prices peak.
This has flowed through to impact on the group's profit for the period, but has allowed the group to improve cash flow, Mr Gadsden added.
"I do remain confident about the group's long term outlook." he continued.
"I believe Michelmersh's efficient modern production and distribution operations, highly regarded sales team and strong balance sheet put us in a good position to use the current market conditions to our advantage.
"We are therefore considering a number of potential investment opportunities."
In line with the established dividend policy, the board said it is not recommending an interim dividend, but again expects to recommend the payment of a final dividend at the year end, to underline the group's continued confidence in long term prospects.
Mr Gadsden said it is key to the ongoing profitability of the business that the group maximises output and reaps the rewards of the investment efficiencies made over the past five years.
Whilst production cost pressures are expected to persist, especially over this coming winter, he said the group anticipates that energy prices could then stabilise.
Michelmersh, which last week saw Baggeridge Brick, its only UK listed rival accept an £89 million offer from Austrian rival Wienerberger, is reviewing options to expand the business.
It said current market conditions might work in favour of a business with efficient modern production and distribution operations, a nationwide sales team and a strong balance sheet.
Mr Gadsden said a number of potential opportunities have been identified, which are currently being evaluated.
He added until the board sees demand pick up and a flattening or reduction in energy costs, it will continue to prioritise cash management.
House broker Charles Stanley responded by cutting its recommendation on Michelmersh to "accumulate" from "buy" and cut its profit estimates even though it remains a long-term buyer.
It has cut full-year 2006 profit estimate by £500,000 to £1 million noting the increase in revenues despite continuing difficult market conditions.
Charles Stanley also pointed out that Michelmersh managed to maintain volumes and even secure a price increase even despite the impact of increased energy costs.