Recovering housing market holds hope for Marshalls

INCREASED sales activity from the London Olympics and a tentative recovery in the housing market could help boost order flow, paving specialist and landscape products group Marshalls said today.

The Huddersfield-based firm, which sponsors the Chelsea Flower Show, said that although it remained cautious about the short-term outlook, installer order books at the end of October 2009 were an encouraging 8.1 weeks compared to 6.4 weeks for the same period the year before.

It said that the public sector and commercial market, which accounts for around 58% of the firm’s sales, was still subdued but that the house building market was showing signs of recovery.

However, underlying like-for-like daily sales revenue for the full year ended December 31 was down 16%.

The second half stabalised with a reduction of 11% one a like-for-like basis. Sales to the public and commercial sector were down 18% for the full year while sales to the domestic market slipped by 13%.

Revenue was £312m compared to £378m for the same period 2008.

Marshalls, which raised £34m through a rights issue last year, said it was continuing to focus on driving sales particularly in product areas where activity is more robust.

If necessary, it can reduce its cost base further by implementing a temporary lay-off plan agreed in August.

Cash management has been a priority during 2009 and reductions in stock and capital expenditure have ensured that net debt is slightly better than plan at approximately £69m following the completion of a £20m debenture stock redemption.

The redemption of the Debenture Stock prior to its maturity date will reduce the group’s interest costs in the short to medium term.

“Marshalls continues to balance short term performance with the need to maintain its strong market position, its reputation for operational excellence, its medium term manufacturing capability and its commitment to sustainability,” it said in a statement.

“No significant capital expenditure is necessary in the medium term, although the group continues to innovate and invest selectively to ensure that it continues to be well placed for when markets improve.”

Marshalls said it was also continuing to invest “selectively” in innovation to reduce operating costs and develop new products for existing and new markets.