Marshalls shares were lower on Monday after the groundwork products group revealed falling revenue for the first half of the year amid slower demand.
Revenue for the first half of 2024 fell 14% while adjusted profit before tax sank 20%.
“Marshall’s shares have performed well this year, up over fifteen percent. This morning’s earnings update however indicates the Yorkshire construction firm is under mounting pressure with demand for UK housing floundering and inconsistent,” said Mark Crouch, Market Analyst at investment platform eToro.
“Marshalls, which supplies building, roofing and landscaping materials is facing a precarious set of circumstances, falling revenues and rising costs, in an industry struggling to get going and in desperate need of a kick start.”
The sounds from Marshalls were similar to brickmaker Ibstock – who reported last week – when it came to market conditions. Both noted a soggy first half but were more confident about the outlook for the rest of the year.
“The Group has delivered a resilient performance in weak end markets. The result in the first half is encouraging and demonstrates that the strategy of diversification, building on the Group’s historic core Landscape Products business, through the acquisition and improvement of less cyclical businesses in recent years, has resulted in a more balanced Group,” said Matt Pullen, Chief Executive, Marshalls.
“Whilst market conditions affected the Landscape Products result, I have a strong view that the segment’s performance can be substantially improved through a number of self-help measures which we are implementing at pace. I am excited for the segment’s prospects in a market recovery as it will benefit significantly from operational leverage.
“We are undertaking a review of the Group’s strategy and have identified a number of opportunities to deliver outperformance over the medium term. These include attractive sustainability-driven markets across bricks and masonry, water management and energy transition alongside a cyclical recovery in our core landscape and roofing businesses, supported by the new Government’s commitment to increase housebuilding significantly. We will provide more information on our new five-year strategy at a capital markets event on 19 November 2024.
“We remain cautiously optimistic of a modest improvement in the Group’s end markets during the second half of the year predicated on a progressive improvement in the macro-economic environment. Against this backdrop and with the benefit of ongoing management actions, the Board believes that profitability and pre-IFRS16 net debt for the full year will be broadly in-line with its previous expectations.”
Investors will be pleased to see the dividend maintained at 2.6p despite the poor performance for the first half.