Profit warning at building products group as economic uncertainty bites
Marshalls, which manufactures products for the built environment, says its like-for-like group revenue contracted by 14%, in a trading update for the four months to April 2023.
The Elland-headquartered business explains this reflects the uncertain macro-economic climate, a fall in new house building and continued weakness in private housing RMI activity.
Marshalls’ update warns: “In the first quarter of the year, National House Building Council new housing starts were 27% lower than 2022, which had an impact on the performance of all the group’s reporting segments.
“Management have acted quickly to reduce costs in the business and are accelerating plans to improve production efficiency, whilst ensuring flexibility to respond when market demand improves.”
Group revenue for the four months ended 30 April 2023 was £227m (2022: £202m), which represents year-on-year growth of 12% including the benefit of Marshalls’ acquisition of roof systems manufacturer – Marley.
The group says its Marshalls Landscape Products has continued to experience tough market conditions due to its exposure to new house building and the more discretionary elements of private housing RMI.
This division delivered revenue of £110m (2022: £140m), which a fall of 21% compared to 2022.
Meanwhile, Marshalls Building Products delivered revenue of £55m (2022: £61m), which a contraction of 9% and Marley Roofing Products produced revenue of £61m, which fall of 6% compared to the corresponding period in 2022.
The group says further actions have been taken to remove around 70 indirect roles in the Marshalls businesses, which will result in annualised savings of around £3.5m.
Marshalls adds it is still confident that it will be able to generate profitable long-term growth when market conditions improve.
But in the near-term, it expects the macro-economic climate to remain challenging, with its trading performance in the year to date weaker than originally anticipated.
The Board now expects to deliver a result which is lower than its original expectations.
