Marley Boosts Revenue as Marshalls Reports Falling Sales
THE ACQUISITION OF roof tile manufacturer Marley boosted group revenue for parent company Marshalls plc in the four months ended 30 April 2023.
In its latest trading update, the company reports group revenue of £227 million (2022: £202 million), which represents year-on-year growth of 12%. On a like-for-like basis, group revenue contracted by 14%, which the company says was due to the uncertain macro-economic climate, a reduction in new house building and continued weakness in private housing RMI.
A fall in new housing starts of 27% on the year in the first quarter of the year had an impact on the performance of the group. The business says management has “acted quickly” to reduce costs and is accelerating plans to improve production efficiency, whilst ensuring flexibility to respond when market demand improves.
Divisional Trading Performance
Marley Roofing Products delivered revenue of £61 million, a 6% reduction on 2022. Viridian, the integrated solar roofing division of Marley, delivered further strong growth supported by the changes to building regulations. However, this was offset by a weaker performance in roofing due to lower volumes of new build housing.
The integration of Marley, following its acquisition in 2022, continues to make good progress, Marshalls reports. Early successes in reducing vacancies have been maintained and efficiencies in concrete tile production lines upheld, resulting in “significant” reductions in lead times across several product lines. This has enabled the business to deliver a much more targeted approach to asset failures and refurbishment, it says.
Paul Reed, Marley’s commercial leader has been promoted to take responsibility for the trading activities of Marshalls Landscape and the Building Products divisions.
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. It delivered revenue of £110 million, down 21% from £140m in 2022 million. The division lost 70 jobs saving £3.5m in the second half of last year.
Marshalls Building Products revenue was £55 million, down 9% on 2022’s £61m. Bricks and masonry and mortars businesses’ revenue was modestly lower year-on-year, whilst drainage and aggregates were held back by deferred new housing starts.
The Group disposed of its former Belgian subsidiary in April 2023, which, it says, simplifies operations and enhances focus on the UK construction market.
The Group reports pre-IFRS16 net debt of £220 million on the balance sheet at the end of April. The increase since December 2022 year end of £29 million reflects seasonal working capital trends and is in-line with the Board’s expectations. The Board’s ongoing priority is to reduce leverage utilising free cash flow generated by the Group, and its net debt expectations for the full year remain unchanged.
The business says it remains confident of delivering “profitable long-term growth when market conditions improve and continues to focus on its key strategic initiatives”. In the near-term, the macro-economic climate is expected to remain challenging and the trading performance in the year to date has been weaker than originally anticipated.
The company says its Board’s expectations for 2023 were set with reference to the Construction Products Association’s (CPA) Winter Forecast, published in January 2023. The CPA reduced its 2023 construction output forecast driven by a 6% drop in new build housing to a year-on-year contraction of 17%. The CPA cites mortgage rates and the end of Help to Buy. Taking these factors together, Marshalls plc now expects to deliver lower than expected results.
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