Marshalls plc, a leading manufacturer of products for the built environment, provides the following trading update for the nine month period ended 30 September 2023.
The Group delivered revenue of £528 million (2022: £544 million), which is three per cent lower 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 12 per cent. In the third quarter, Group revenue contracted by nine per cent on a like-for-like basis, which compares to a reduction of 13 per cent in the first half of the year. The decisive actions taken by management in response to market conditions, that were summarised in the half year results, have been largely concluded. The Board’s expectations for the full year remain unchanged.
Divisional trading performance
| Like-for-like revenue growth | HY June | Q3 | YTD September |
| Marshalls Landscape Products | -18% | -8% | -15% |
| Marshalls Building Products | -9% | -14% | -11% |
| Marley Roofing Products | -7% | -7% | -7% |
| Group | -13% | -9% | -12% |
Marshalls Landscape Products’ revenue for the period was £257 million (2022: £311 million), which represents a reduction of 17 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 15 per cent. The like-for-like rate of contraction slowed in the third quarter to eight per cent from the 18 per cent reported at the half year, driven by softer prior year comparatives and a seasonal weighting towards commercial products, which have performed better than those sold into the domestic market.
Marshalls Building Products’ revenue for the period was £133 million (2022: £149 million), a reduction of 11 per cent over the prior year. The rate of contraction in the third quarter increased to 14 per cent compared to nine per cent reported at the half year. The rate of revenue decline in the drainage and aggregates businesses moderated in the third quarter; however, this was offset by a slowing in the bricks and mortars businesses, which had been broadly flat in the first half.
Marley Roofing Products’ revenue for the period was £138 million (May to September 2022: £84 million), which represents a reduction of seven per cent on a like-for-like basis. This rate of contraction was in-line with the performance in the first half of the year. In the third quarter, the Group reported a moderation of the decline in the traditional roofing business offset by a softer performance from Viridian Solar, due to weakness in the new build market.
Management actions
As summarised in the half year results, management took decisive actions to improve agility and right-size the business through reducing capacity and costs and maintaining a disciplined approach to cash management. This necessitated the closure of a factory, a reduction in shifts and capacity in other facilities, and a reorganisation of Marshalls’ commercial team focused on simplifying the business. These actions were largely concluded by the end of the third quarter and are expected to deliver annualised savings of around £9 million. Management is delivering the reduced capital expenditure plans set out earlier in the year, executing a programme of surplus land disposals that has generated around £6 million in the year to date, and focusing on efficient working capital management in order to reduce the Group’s net debt.
Importantly, management has balanced the need to reduce capacity and the cost base in the short-term while retaining the flexibility to increase production when demand recovers. Management continues to review opportunities to improve efficiency without compromising longer-term capacity flexibility. The Group has latent capacity across all its businesses that can satisfy materially higher demand than that being currently experienced.
Balance sheet and liquidity
The Group’s balance sheet remains robust, with pre-IFRS16 net debt of approximately £190 million at the end of September (September 2022: £222 million; June 2023 £185 million), with the year-on-year reduction reflecting the cash generative nature of the business and management’s focus on working capital. The Board’s ongoing priority is to reduce leverage and it remains confident of reporting a reduction in net debt at the full year.
Outlook
Trading in the third quarter was in-line with the Board’s expectations which anticipated a sustained period of lower volumes. The Board does not expect any material changes in current trading patterns during the fourth quarter of the year and therefore remains confident of achieving a result that is in-line with its expectations for 2023.
Enquiries:
| Martyn Coffey Justin Lockwood | Chief ExecutiveChief Financial Officer | Marshalls plc | +44 (0)1422 314777 |
| Tim Rowntree | MHP Communications | +44 (0)20 3128 8540 | |
| Charlie Barker | +44 (0)20 3128 8147 |