REG - Marshalls PLC - Trading Statement

MarshallsAnnouncement

09/05/2023 07:15

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RNS Number : 6703Y  Marshalls PLC  09 May 2023

9 May 2023

 

Marshalls plc

('Marshalls' or 'Group')

 

Trading Update

 

Ahead of its Annual General Meeting tomorrow, Marshalls plc, a leading
manufacturer of products for the built environment, provides the following
trading update for the four months to April 2023.

 

Group revenue for the four months ended 30 April 2023 was £227 million (2022:
£202 million), which represents year-on-year growth of 12 per cent including
the benefit of the acquisition of Marley. On a like-for-like basis, Group
revenue contracted by 14 per cent reflecting the uncertain macro-economic
climate, a reduction in new house building and continued weakness in private
housing RMI activity.

 

In the first quarter of the year, National House Building Council new housing
starts were 27 per cent lower than 2022, which had an impact on the
performance of all the Group's reporting segments.  Management have acted
quickly to reduce costs in the business and are accelerating plans to improve
production efficiency, whilst ensuring flexibility to respond when market
demand improves.

 

Divisional trading performance

Marshalls Landscape Products has continued to experience tough market
conditions due to its exposure to new house building and the more
discretionary elements of private housing RMI.  Against this backdrop, it
delivered revenue of £110 million (2022: £140 million), which represents a
reduction of 21 per cent compared to 2022.

 

Marshalls Building Products delivered revenue of £55 million (2022: £61
million), which represents a contraction of nine per cent.  Revenue in the
bricks and masonry and mortars businesses was modestly lower year-on-year,
whilst drainage and aggregates were held back by deferred new housing starts.

 

Marley Roofing Products delivered revenue of £61 million, which represents a
contraction of six per cent compared to the corresponding period in 2022.
 Viridian delivered further strong 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.

 

Strategic developments

Following the reduction in the cost base and manufacturing capacity
implemented in the second half of last year in Marshalls Landscape Products,
further actions have been taken to remove around 70 indirect roles in the
Marshalls businesses, which will result in annualised savings of around £3.5
million. The Board will continue to monitor performance and respond flexibly
to evolving market conditions to ensure that the Group's manufacturing
capacity and cost base are aligned to market demand. In addition, in order to
leverage Marley's excellent commercial strengths, we are pleased to have
promoted Marley's commercial leader to take responsibility for the trading
activities of Marshalls Landscape and Building Products.

 

The Group successfully completed the disposal of its former Belgian subsidiary
in April 2023, which simplifies operations and enhances the Group's focus on
the UK construction market.  This business contributed revenue of £21
million and an operating loss of £0.7 million in 2022.

 

Good progress continues to be made with the integration of Marley.  The early
successes regarding the reduction of vacancies have been maintained. The
increase in efficiencies has also been upheld across the concrete tile
production lines, which has resulted in a significant reduction in lead times
across several product lines. This has enabled the business to deliver a much
more targeted approach to asset failures and refurbishment.

 

Balance sheet and liquidity

The Group's balance sheet continues to be robust, with pre-IFRS16 net debt of
£220 million at the end of April.  The increase since December 2022 year end
of £29 million reflects seasonal working capital trends and is in-line with
the Board's expectations. The Board's ongoing priority is to reduce leverage
utilising free cash flow generated by the Group, and its net debt expectations
for the full year remain unchanged.

 

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 its key strategic initiatives.  In the near-term, the macro-economic
climate is expected to remain challenging and the trading performance in the
year to date has been weaker than originally anticipated.

 

The Board's expectations for 2023 were set with reference to the Construction
Products Association's ('CPA') Winter forecast that was published in January
2023.  The CPA reduced its 2023 construction output forecast earlier this
month.  This was principally driven by a six-percentage point deterioration
in new build housing to a year-on-year contraction of 17 per cent.  The CPA
cited reduced demand in the wake of the mini budget, the consequential sharp
rise in mortgage rates and the end of Help to Buy as contributing factors for
the downgrade.

 

Taking these factors together, the Board now expects to deliver a result that
is lower than its original 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:

 

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

 Justin Lockwood   Chief Financial Officer

 Tim Rowntree                                MHP Communications  +44 (0)20 3128 8540
 Charlie Barker                                                  +44 (0)20 3128 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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