The board of Baggeridge, the UK brick manufacturer, believes that the Company's profit for the year to 30 September 2002 will fall substantially short of market expectations. Unaudited profit for the quarter to 31 December 2001 was equivalent to that for the corresponding quarter of the previous year. The subsequent reduction in profitability reflects a shortfall in recovery of the large increase in gas costs, referred to in the Chairman's statement in December, and continuing production problems following resumption of operations after the normal Christmas closures and has been exacerbated by a downturn in despatches occasioned by the exceptionally wet weather in February. The production problems are connected with inefficiencies caused by a greater than anticipated demand for stock bricks pending the installation and commissioning of new machinery. Baggeridge has a robust balance sheet, with net assets per share of 127p and low gearing at 30 September 2001 and a healthy cash flow. In the absence of unforeseen circumstances, the Directors propose to maintain dividends per share for the year ending 30 September 2002 at 5.0p.