Reporting a 29 per cent increase in full year pretax profit to pounds 5.3 m, Peter Ward, chairman, said that buoyant commercial sales had ironed out earnings losses from housing starts, which were down 5 per cent across the country.
"Despite the general economic uncertainty, forecasters are generally predicting construction activity to be at similar levels in 1999, with increases in infrastructure and the commercial sector offsetting declines elsewhere," he added.
Baggeridge, which derives roughly 50 per cent of its turnover from the commercial properties, recently won a contract to supply bricks for a new hospital in Norwich, funded by the Private Finance Initiative.
Martin Haines, the finance director, predicts that orders from investment projects will continue to grow next year.
He also expects government new housing requirement forecasts, due in January, to be much higher than previously believed, "with the underlying need for new housing in the UK forcing itself through to the construction sector in the medium to long term."
Simon Larkin, an analyst at Dresdner Kleinwort Benson, said that the results were "highly impressive", and that the company was "extremely well managed." Baggeridge's share price rose 0.5p to 79p on the back of today's announcement, and at current forecasts of pounds 40m in pretax profits for 1999, it is valued at a forward p/e of 8.5.
"The current market valuation of this company is an anomaly, which will be corrected. They are already on a low rating, with potential bad news largely accounted for in the share price," Mr Larkin added.Reuse content