Paving specialist travelling the right path to recovery

PAVING specialist Marshalls said today that decisive action and a focus on cash conservation has helped it reduce its cost base “significantly”.

The Huddersfield-based firm, which earlier this month confirmed it had successfully raised £34m through a rights issue, said a combination of actions including closures and temporary shift losses as well as stock reduction meant that capital expenditure was being reduced in line with expectations.

Over the last year Marshalls, which sponsors the Chelsea Flower Show and has provided the stone to pave London’s Trafalgar Square, has shed 400 jobs – 14% of its workforce – as part of cost-cutting measures, which have included consolidating its street furniture and stone walling businesses and closing four concrete manufacturing sites.

Marshalls said that it needed to raise the £34m to reduce borrowings and avoid breaching covenants on its current bank facilities. Borrowings as of April 30 were £135m.

As a result of the rights issue and the cost cutting measures the group’s borrowings have fallen to £74m from £111m in December.

Group net debt is expected to reduce further in the second half of 2009 as the impact of management actions continues to take effect.

Revenue for the six months ended June 30 was £166m down from £211m the year before.

Underlying daily sales revenue on a like for like basis was down 19% against a comparatively strong first half year in 2008.

However, the firm remains positive that it is in a good position to take advantage of any economic recovery.

It is growing its registers of installers and builders merchant customers and is hoping that its award winning garden at the recent Chelsea Flower Show will promote its brand.

In the public sector the group is continuing to reinforce its position as a market leading landscape products specialist. Once again, it is hoping a string of awards for its sustainable business practice will elevate its market position.

But Marshalls added that sales demand remained uncertain with no clear pattern emerging.

The public sector and commercial market continues to be subdued although the lead indicators predict a levelling out during the second half of the year.

The domestic market performed in line with expectations with installer order books at the end of June, 2009 holding firm at 7.1 weeks (June, 2008, 8.2 weeks and April, 2009 7.1 weeks).

It continued: “Marshalls has a leading position in its core markets, with a strong brand, an efficient manufacturing and sourcing infrastructure and an enviable national distribution network.

“Cash management, cost reduction and innovation remain the key priorities and, with the benefit of the recent rights issue, the objectives are to maximise short term performance, to emerge from the current economic downturn in a stronger position and to be able to take advantage of the growth opportunities that the group’s core strengths are expected to generate.”

Established in the late 1880s, Marshalls is one of the UK’s leading manufacturer of superior natural stone and innovative concrete hard landscaping products, supplying the construction, home improvement and landscape markets.

The group provides the product ranges, design services, technical expertise, innovative ideas and inspiration to transform gardens, drives and public and commercial landscapes.