18 March 2024
Management actions position the Group well for when markets recover
Marshalls plc, a leading manufacturer of sustainable solutions for the built environment, announces its results for the year ended 31 December 2023
Financial summary
| £M | 2023 | 2022 | Change (%) |
| Revenue | 671.2 | 719.4 | (7%) |
| Adjusted results (Notes 1 and 2 below) | |||
| Adjusted EBITDA | 103.6 | 136.0 | (24%) |
| Adjusted operating profit | 70.7 | 101.1 | (30%) |
| Adjusted profit before tax | 53.3 | 90.4 | (41%) |
| Adjusted basic EPS – pence | 16.7 | 31.3 | (47%) |
| Adjusted ROCE (%) | 8.4 | 13.3 | (4.9ppts) |
| Final dividend – pence | 5.7 | 9.9 | (42%) |
| Total dividend for the year – pence | 8.3 | 15.6 | (47%) |
| Pre-IFRS 16 net debt | 172.9 | 190.7 | 9% |
| Statutory results | |||
| Operating profit | 41.0 | 47.9 | (14%) |
| Profit before tax | 22.2 | 37.2 | (40%) |
| Basic EPS – pence | 7.4 | 11.4 | (35%) |
| · | Group financial performance impacted by challenging end market conditions |
| · | Benefitted from agile and flexible business model:· Decisive action taken to right size manufacturing capacity and the cost base, resulting in annualised savings of £11 million, with around 40 per cent delivered in 2023· Flexibility maintained in the manufacturing network in order to respond rapidly to deliver higher volumes when markets recover |
| · | Term loan reduced by £30 million to £180 million in early January 2024 which, together with the £160 million RCF, provides significant liquidity to fund the Group’s strategy |
| · | Robust balance sheet with net debt reducing by £17.8 million to £172.9 million (on a pre-IFRS 16 basis), and year-end leverage of 1.9 times adjusted EBITDA |
Operational and strategic highlights
| · | On 1 March 2024 Matt Pullen was appointed as Chief Executive, succeeding Martyn Coffey who stepped down from the Board on 29 February 2024 |
| · | Dual block plant in St Ives operational, improving capabilities and new product development |
| · | Exited the Group’s Belgian operation allowing the Group to solely focus on the UK construction market |
| · | Ahead of Marshalls’ carbon reduction target: enlarged Group’s targets submitted to SBTi for approval. Progress made towards commercialising the Group’s ESG and carbon credentials |
| · | Marshalls’ logistics function to be outsourced to Wincanton in H1 2024 – expected to improve service and deliver efficiencies |
Outlook
| · | Revenue in the first two months of the year was lower than 2023 and reflects the continued weakness seen in the second half of last year |
| · | In line with recent sentiment of UK economic and industry forecasts, the Board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves. The start of this recovery is now expected to be slower and more modest than previously assumed. Therefore the Board believes that revenues in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023. |
| · | The Board remains confident that actions taken to improve efficiency and flexibility, together with a more diversified and resilient portfolio has strengthened the Group. |
| · | With clear long-term structural growth drivers and attractive market growth opportunities, the Group is well positioned for relative outperformance in the medium-term, and this will underpin a material improvement in profitability as end markets recover. |
Matt Pullen, Chief Executive, commented:
“I am delighted to be appointed as Chief Executive of Marshalls. During 2023, the business was necessarily focused on controlling and improving the efficiency and agility of its cost base, leveraging its strength in operations, as well as rigorous and strong management of cashflow. All of the actions taken demonstrate the business is well managed and agile. I would like to thank all my colleagues for their hard work and commitment throughout last year.
I have been with the Group since early January and these first two months have reinforced my view of both the strengths of the business and the significant opportunity to deliver profitable growth and create shareholder value. Over the coming months our focus will be on evolving the existing strategy, with a focus on the medium and longer-term market opportunities related to climate mitigation and adaptation and the structural drivers that will fuel demand for the Group’s products and solutions.
In the short-term markets are expected to remain challenging with continued weakness in the first half of the year followed by a progressive recovery in the second half as the macro-economic environment improves. This recovery is however expected to be slower and more modest than previously anticipated.
The Board remains confident that actions taken to improve efficiency and flexibility, together with a more diversified and resilient portfolio have strengthened the Group. With clear long-term structural growth drivers and attractive market growth opportunities, the Group is well positioned for relative outperformance in the medium term, and this will underpin a material improvement in profitability as end markets recover.”
There will be a live presentation today at 10:00am at the offices of Peel Hunt for analysts and investors, which will also be webcast live. The presentation will be available for analysts and investors who are unable to view the webcast live and can be accessed on Marshalls’ website at www.marshalls.co.uk. Users can register to access the webcast using the following link:
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.
Notes:
| 1. | The results for the year ended December 2023 have been disclosed after adding back adjusting items. These are set out in Note 4. |
| 2. | This Preliminary Announcement includes alternative performance measures (‘APMs’), which are not defined or specified under the requirements of International Financial Reporting Standards. The Board believes that these APMs provide stakeholders with important additional information on the Group. To support this, we have included an accounting policy note on APMs in the Notes to this Preliminary Announcement, a glossary setting out the APMs that we use, how we use them, an explanation of how they are calculated, and a reconciliation of the APMs to the statutory results, where relevant. See Notes 4 and 21 for further details. |
Enquiries:
| Matt Pullen | Chief Executive | Marshalls plc | +44 (0)1422 314777 |
| Justin Lockwood | Chief Financial Officer | +44 (0)1422 314777 | |
| Tim Rowntree | MHP | +44 (0)78 3462 3818 | |
| Charlie Barker | +44 (0)77 3646 4749 |