TIDMMSLH
RNS Number : 6442H
Marshalls PLC
31 July 2023
31 July 2023
Marshalls plc
('Marshalls' or 'Group')
Trading Update
Marshalls plc, a leading manufacturer of products for the built
environment, provides the following trading update for the six
months to 30 June 2023, ahead of the release of its interim results
on 16 August 2023.
The Board expects to report Group revenue for the six months
ended 30 June 2023 of GBP354 million (H1 2022: GBP348 million),
which is two per cent higher than the corresponding period in 2022
and includes the contribution of four additional months of revenue
from Marley. On a like-for-like basis, Group revenue contracted by
13 per cent. Adjusted profit before taxation for the half year is
expected to be around GBP33 mill ion (H1 2022: GBP45 million),
subject to auditor review.
This result has been delivered against the backdrop of
challenging market conditions with persistent weakness in new build
housing and private housing RMI, which are key end markets for the
Group. The sustained high levels of inflation, increasing interest
rates and weak consumer confidence means that the Board anticipates
the Group's performance in the second half will be below its
previous expectations.
Divisional trading performance
Marshalls Landscape Products has continued to experience tough
market conditions due to its exposure to new build housing and the
more discretionary elements of private housing RMI. Revenue for the
period was GBP174 million (H1 2022: GBP217 million), which
represents a reduction of 20 per cent compared to 2022. On a
like-for-like basis, after adjusting for the disposal of Marshalls
NV in April 2023, revenues contracted by 18 per cent.
Marshalls Building Products delivered a more resilient
performance, supported by demand for bricks, masonry and mortars,
offset by weaker volumes in drainage and aggregates, which are
correlated to the lower number of new housing starts. Revenue for
the period was GBP87 million (H1 2022: GBP96 million), which
represents a contraction of nine per cent compared to 2022.
Marley Roofing Products saw mixed demand across its product
offering. Viridian delivered further growth in integrated solar
revenues supported by changes in building regulations, which was
offset by a weaker performance in roofing, due to lower volumes of
new build housing. Revenue for the period was GBP93 million, which
represents a contraction of seven per cent compared to 2022 on a
like-for-like basis.
Management actions
The Board has taken decisive action in responding to the
challenging trading conditions, by implementing a number of
measures to align capacity and costs with demand, with a strong
focus on managing cash. This has resulted in the closure of the
Group's factory in Carluke, a reduction in shifts and capacity in
other facilities, and a restructuring of the Marshalls commercial
team. Regrettably, these changes are expected to result in a
reduction of approximately 250 roles in addition to around 150
roles that were removed in the second half of 2022. These actions
are expected to deliver annualised savings of approximately GBP9
million, with around 40 per cent of this benefit being realised in
2023. The Board has reduced its capital expenditure plans without
impacting critical projects, is executing a programme of surplus
land disposals, and has continued to focus on efficient working
capital management in order to reduce the Group's net debt.
We have balanced the need to reduce our capacity and cost base
in the short term while retaining the flexibility to increase
production when demand recovers. The Group has latent capacity
across all its businesses that can satisfy materially higher demand
than that being experienced in 2023.
Balance sheet and liquidity
The Group's balance sheet remains robust, with pre-IFRS16 net
debt of approximately GBP185 million at the end of June (June 2022:
GBP208 million; December 2022: GBP191 million) reflecting the cash
generative nature of the business and management's focus on working
capital. The Board's ongoing priority is to reduce leverage
utilising free cash flow generated by the Group.
Outlook
The Board remains confident that the Group is well placed to
deliver profitable long-term growth when market conditions improve
and continues to focus on executing its key strategic
initiatives.
Whilst previously anticipating a recovery in market conditions
in the second half of the year, the Board is now of the view that
an improvement in the second half performance is unlikely given the
macro-economic backdrop. In addition, the Board has chosen to
reduce production volumes with a negative impact on operational
efficiency in order to manage working capital. Taking these factors
together, and in the absence of a recovery in demand in the Group's
end markets, the Board believes that the result in the second half
will be markedly weaker than the first half, and consequently
expects to deliver a result for the full year that is lower than
its previous expectations.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014), as it forms part of domestic law by
virtue of the European Union (Withdrawal) Act 2018) ("MAR") prior
to its release as part of this announcement and is disclosed in
accordance with the Company's obligations under Article 17 of those
Regulations.
Enquiries:
Chief Executive
Martyn Coffey Chief Financial
Justin Lockwood Officer Marshalls plc +44 (0)1422 314777
+44 (0)20 3128
Tim Rowntree MHP Communications 8540
+44 (0)20 3128
Charlie Barker 8147
Note to the Editor:
About Marshalls plc:
Established in the late 1880s, Marshalls plc is a leading UK
manufacturer of products for the built environment. It operates
through three trading divisions: Marshalls Landscape Products;
Marshalls Building Products; and Marley Roofing Products. Marshalls
Landscape Products is the UK's leading manufacturer of superior
natural stone and innovative concrete hard landscaping products,
supplying the construction, home improvement and landscape markets.
Marshalls Building Products is a supplier of concrete drainage
products, concrete bricks, ready-to-use mortars and aggregates.
Marley Roofing Products is a leader in the manufacture and supply
of pitched roofing systems, including clay and concrete tiles,
timber battens, roof integrated solar solutions and roofing
accessories.
The Group operates a national network of manufacturing and
distribution sites throughout the UK. Marshalls is committed to
quality in everything it does, including the achievement of high
environmental and ethical standards and continual improvement in
health and safety performance. Its strategic goal is to become the
UK's leading manufacturer of products for the built
environment.
Forward-Looking Statements:
Any statements in this release, to the extent that they are
forward-looking, are subject to risk factors associated with,
amongst other things, the economic and business circumstances
occurring from time to time in the markets in which Marshalls
operates. It is believed that the expectations reflected in these
statements are reasonable, but they may be affected by a wide range
of variables, which could cause actual results to differ materially
from those currently anticipated. More information about the
factors that may affect Marshalls' performance is contained in the
Annual Report to shareholders for the year ended 31 December
2022.
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