REG - Marshalls PLC - Trading Statement

MarshallsAnnouncement

07/10/2022 07:00

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RNS Number : 0895C  Marshalls PLC  07 October 2022

7 October 2022

 

Marshalls plc

('Marshalls' or 'Group')

 

Trading update

 

This announcement contains inside information

 

Group revenue for the nine months ended 30 September 2022 was £544 million
(2021: £453 million), which represents year-on-year growth of 20 per cent
including the benefit of the acquisition of Marley. On a like-for-like basis,
Group revenue growth was four per cent.

 

The Group's segmental performance followed the trends that we reported at our
results for the half year ended 30 June 2022, with the more positive backdrop
within Marshalls Building Products and Marley offset by the continuation of
tougher trading conditions in Marshalls Landscape Products, which has greater
exposure to the discretionary element of private housing RMI.

 

Marshalls Building Products has seen revenue growth of 22 per cent to £149
million (2021: £123 million) in the nine-month period, with a particularly
strong performance from the Bricks & Masonry business.  Demand has
remained robust throughout the third quarter, with revenue growth at a similar
level to the first half of the year.  Marley delivered revenue of £84
million in the post-acquisition period, which represents growth of nine per
cent compared to the corresponding period in 2021.  The business grew in the
third quarter, albeit the rate of growth moderated due to a combination of a
softer market backdrop and destocking in the distribution channel, however the
business continues to trade ahead of our expectations at the time of the
acquisition.

 

Marshalls Landscape Products has continued to face tough trading conditions
and reported revenue of £311 million (2021: £330 million) in the nine-month
period, which represents a reduction of six percent.  The rate of contraction
increased in the third quarter to 16 per cent compared to one per cent at the
half year, due to a marked softening of demand for private housing RMI in both
the UK and international markets and destocking in the distribution channel.
We have responded by reducing our manufacturing output to manage inventory
levels, which has impacted the efficiency of our factories in the short
term.  These actions will reduce capacity and costs within our manufacturing
network and trading function to ensure alignment with lower levels of demand
and this is expected to reduce operating costs by around £10 million per
annum from the start of 2023.  In the medium term, we continue to target
returning this business to a 15 per cent plus operating margin.

 

The Group's balance sheet continues to be robust, with pre-IFRS16 net debt to
proforma EBITDA expected to be approximately 1.5 times at the year end, and we
maintain good headroom against our bank facility and its covenants, which will
support investment priorities going forward.

 

We continue to effectively mitigate cost inflation through price increases.
However, taking into account the combined impact of the accelerated rate of
revenue contraction in Marshalls Landscape Products in the third quarter and
the reduction in efficiency resulting from lower manufacturing output in this
reporting segment, the Board now anticipates that the outturn for the Group as
a whole will be slightly below the bottom end of the current range of market
expectations*.

 

*Company compiled market consensus is £98.5 million with a range of £95.1
million to £101.0 million.

 

Marshalls will host a conference call for investors and analysts at 9am on 7
October 2022 (today).  Please contact MHP Communications via
Marshalls@mhpc.com (mailto:Marshalls@mhpc.com) or 020 3128 8666, to receive
the conference call details.

 

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:

 

 Martyn Coffey     Chief Executive           Marshalls plc       +44 (0)1422 314777

 Justin Lockwood   Chief Financial Officer

 Andrew Jaques                               MHP Communications  +44 (0)20 3128 8540
 Charlie Barker

 

Note to the Editor:

 

About Marshalls plc:

 

Established in the late 1880s, Marshalls plc 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 provides the product ranges, design services, technical expertise,
innovative ideas and inspiration to transform gardens, drives and public and
commercial landscapes. Following the acquisition of Marley, the Group is now
also 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 its own quarries and manufacturing sites throughout the UK,
including a national network of manufacturing and distribution sites, and has
operations in Belgium and sales representation in other international
markets.  As a major plc, 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.

 

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 2021.

 

 

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