REG - Marshalls PLC - Trading Statement

MarshallsAnnouncement

31/07/2023 07:00

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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 £354 million (H1 2022: £348 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 £33 million (H1 2022: £45 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 £174 million
(H1 2022: £217 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 £87 million (H1 2022: £96
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 £93
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 £9 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 £185 million at the end of June (June 2022: £208 million;
December 2022: £191 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:

 

 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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