Building products manufacturer Marshalls (LON: MSLH) has been hit by a 14% decline in like-for-like revenues in the first four months of the year, even though prices have been increased. Volumes have fallen by one-fifth. Operational gearing means that this has a greater effect on profit.
Peel Hunt has cut its 2023 pre-tax profit forecast by one-fifth to £70m, down from £90.4m in 2022. Cost cutting has helped to reduce the fall in profit.
Because Marley is included this year, but not in the comparatives, overall revenues are 12% ahead after price rises of 8-10%. Like-for-like Marley sales are 6% lower. The loss-making Belgian business has been sold.
Weak housebuilding is hampering the business. Housing volumes are forecast to fall by 17% this year.
The fully listed Marshalls share price slipped 8.8% to 271.8p, which is 13 times prospective earnings. The total dividend is forecast to fall from 15.5p a share to 10.5p a share this year, providing a yield of 3.9%.
This should prove to be the bottom of the cycle with a recovery in profit to £70m forecast for 2024, helped by further cost cutting.