High energy prices are still hurting Michelmersh Brick Holdings, parent of Telfordbased Blockleys.

But the UK's largest producer of handmade specification bricks and clay paviors told its annual meeting yesterday that it continued to hold its own.

Eric Gadsden, chairman of Michelmersh, said group turnover was ahead of last year despite a decline in sales across the industry as a whole.

But margins remained under pressure, he indicated.

"Energy costs have continued to be volatile during the spring while industry product prices have not increased to fully recover these costs."

In March the firm reported pretax profits down from £1.265 million in 2004 to £518,000 last year on turnover up 15 per cent to £21.1 million.

However the value of its net assets increased by nearly 40 per cent to £43.8 million, following an option agreement signed with builder Persimmon on 60 acres of land at Telford.

Mr Gadsen said: "We continue to experience strong demand and sales at our smaller specialist works and are managing production levels against demand, cost levels and price recovery at Blockleys.

"Our major capital expenditure programme is now complete and we continue to take steps to strengthen our sales effort and develop complementary products to utilise the flexibility attained in our production processes as a result of this investment.

"The masterplan for the development of the 60 acres at Telford for residential land is now being worked on and a planning application for the initial phase is being prepared. The value of this land was reflected in our balance sheet for the first time at the end of the last financial year and will stand us in good stead until the market returns to more normal levels."

Following approval at the meeting, the company's maintained dividend of 1.1 pence per share will be paid to shareholders on July 7.

Mr Gadsen said it reflected "continued confidence in the group's performance". Block-leys employs 120 people.

Michelmersh, based in Hertfordshire, has supplied bricks for projects such as the British Library extension, the new extension to Kings Cross St Pancras in London to accommodate Eurostar, the Royal Geographical Society and the Paternoster Square development next to St Paul's.

Meanwhile building materials group Hanson said it was also eyeing price increases to absorb high energy bills.

"The increase in energy costs incurred in 2005 will impact our annual cost base in 2006, despite our cost reduction initiatives. We will remain focused on increasing our prices to recover these costs," Hanson said in a statement. "As anticipated, the start to the year in the UK has been slower than the same period last year."

It expected demand and pricing in the US, its biggest market, to remain strong.

"Overall, we continue to expect to make further progress in 2006 based on our strong asset base and market positions, ongoing financial discipline and continued investment in acquisitions."