Marshalls profits crumble amid construction slowdown

Groundwork building suppliers Marshalls shares fell on Monday after announcing downbeat results for the year ending 31st December 2023.

Revenue for the year was 7% lower at £671.2m as challenging conditions curtailed their customer’s ability to spend.

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Despite Marshalls’ efforts to prop up earnings to lower costs, the overarching headwinds in the UK‘s construction industry resulted in profit falling faster than previously thought. EBITDA fell 24% in 2023 and operating profit sank 30%.

Marshalls shares were over 10% lower at the time of writing. The drop served as a reality check after the shares ground higher from year’s lows amid a broad rally in property and construction-related stocks.

The shares now appear to have decoupled from underlying business performance in the later part of 2023 and today snapped in line with a soggy year for earnings. 

Highlighting the challenges Marshalls continues to face in 2024, the company said revenues in the first two months of 2024 were lower than in 2023. Full year 2024 revenues are expected to be a similar level to 2023.

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The new CEO appointed at the beginning of March has a job on his hands. 

“The building market in the UK has been under significant pressure due to inflation and higher rates and this also extends to those firms who supply the materials such as Marshalls. The recovery has been slower than anticipated and profits have taken a sizeable hit as a result,” said Adam Vettese, analyst at investment platform eToro.

“Whilst there is not much any company can do about the macro factors, Marshalls have been focused on keeping a lid on costs while the market has been tough which it has done reasonably well, though in relative terms, this has not done a great deal to offset the sluggish start to the year. Guidance has been lowered to similar levels seen in 2023 and new chief executive Matt Pullen faces a tough start to his time in the hot seat, already needing to steer a turnaround in fortunes to salvage the year.”

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