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.

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.

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.”

A strong session for IAG, Vodafone and the Scottish Mortgage Investment Trust helped the FTSE 100 higher on Friday as investors globally paused for breath after a choppy week for equities.

Positive sentiment has helped lift global stocks in recent weeks, and it was a welcome surprise to see the FTSE 100 take part this week. Overseas indices, including the German DAX, Japanese Nikkei, and US S&P 500, have all broken to record highs in 2024 so far. 

The FTSE 100’s weighting towards natural resources and the uncertainty surrounding the Chinese economy has prevented it from joining the party, so this week’s gains will be encouraging for UK equity traders.

The FTSE 100 shrugged off overnight weakness in the US and Asia to carve out minor gains on Friday. The index was 0.2% higher at the time of writing.

Interest rates were again at the forefront of investors’ decision-making processes after a raft of economic data this week raised questions around the time of the first rate cuts by major central banks.

“With the prospect of the Fed potentially waiting until later in the summer to cut rates, investors are getting impatient. The Hang Seng in Hong Kong fell 1.4% but Europe managed to avoid a big sell-off,” said Russ Mould, investment director at AJ Bell.

“Stocks in the energy and basic materials sectors were in demand, albeit the FTSE 100 faced opposing forces from weakness in consumer and industrial stocks.”

IAG

IAG shares took off on Friday as more analysts issued positive broker notes on the company. IAG shares were up 6% on Friday and are sharply higher than the lows recorded at the beginning of March.

“International Consolidated Airlines flew to the upper end of the FTSE 100 leader board after investors digested yet another positive bit of news for the company,” Russ Mould said.

“Analysts are turning positive on the stock and following last week’s upgrade by JPMorgan Cazenove, BNP Paribas Exane followed suit by switching from a negative to a positive view. This follows news earlier this week that Moody’s has put the company’s credit rating on review for an upgrade. A higher credit rating gives investors more comfort over the risks associated with owning the shares.”

Scottish Mortgage was also among the top risers after the Investment Trust announced it would buy back $1 billion in shares. The technology-focused trust is traded at over a 10% discount, and the move is an effort to reduce this discount. Scottish Mortgage was 3.9% higher.

Vodafone has completed the long-awaited sale of its Italian unit as part of a strategy to streamline the business and boost profitability.

Southern Europe has been a laggard for Vodafone, and the €8bn disposal will be a relief for investors looking forward to maximising returns from stronger regions, such as the UK and Africa. 

“The sale of Vodafone’s Italian business is intended to mark the final step of its European restructuring and to get the company back on a firm financial footing,” said Russ Mould, investment director at AJ Bell.

Vodafone will return €4bn to shareholders through share buybacks. Investors cheered the news and Vodafone shares jumped 4.6% on Friday.

“The telecoms are unlikely to ever shoot the lights out when it comes to growth, but the reliable nature of their revenue and high barriers to entry make shareholder returns one of the core attractions of these stocks,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“Vodafone’s Italian business has been struggling, so shedding this weight should help the group refocus and the division’s been up for sale for a while. Attention will now turn to how effectively Vodafone uses its resources to fix wider challenges, including high debts, costs and some increasing competition.”