RNS Number : 0519H
Marshalls PLC
06 July 2012
 



Trading Update: 6 July 2012

 

Trading Performance

 

After a good first quarter, the exceptionally poor working conditions experienced in April 2012 continued through to the end of June.  Marshalls' revenue for the six months ended 30 June 2012 of £167 million was 5 per cent lower than last year (2011: £177 million; 2010: £163 million).  The weather impact has resulted in an estimated reduction in sales in the second quarter of approximately £10 million (equivalent to 6 days' installations).

 

Underlying sales to the Public Sector and Commercial end market, which represent approximately 64 per cent of Marshalls' sales, were 2 per cent below last year but are broadly in line with expectations.  Sales to the Domestic end market, for which the second quarter of the year is an important trading period, were adversely affected by the poor weather and were lower by 14 per cent compared with the prior year.  This is partly reflected in an increased installer order book. 

 

Continued progress has been made in developing the International business which now represents 5 per cent of Group revenues.

 

Due to the £8 million investment in Belgium, net debt has increased to £84 million (2011: £71 million) in line with our budget expectations. 

 

Cost Reduction, Cash Management and Selective Investment for Growth

 

In response to continuing macroeconomic uncertainty the Group is currently implementing a wide range of contingency measures. These are reducing costs, reducing inventories and conserving cash to mitigate the impact of the reduced sales. The Group, nevertheless, continues to invest selectively in initiatives which deliver sales growth and an improving market position including street furniture and security products, internal paving and water management products.

 

This operational restructuring is expected to give rise to a one-off cash charge of £7 million.  The estimated annualised cash saving resulting from this is expected to be at least £4 million with a £1 million benefit in the second half of 2012 from actions already taken.  In addition, the cash conservation initiatives are expected to reduce cash outflow by £7 million which will reduce net debt compared with our original expectations.  There will also be a charge for asset impairments and asset write downs of up to £12 million.  These two charges will be combined and reported on the face of the Income Statement.  The Group will continue to provide national geographic coverage to maintain its industry leading customer service. 

 

Outlook

 

The Construction Products Association Spring Forecast shows a 2.9 per cent reduction in UK construction output in 2012 with similar volumes in 2013.  Recent data shows that output has weakened further which is why the above actions are being taken.  The Construction Products Association forecasts show growth resuming in 2014.

 

Encouragingly, the survey of domestic installers at the end of June 2012 revealed order books of 9.0 weeks (2011: 7.0 weeks) compared with 7.5 weeks at the end of April 2012 (2011: 7.1 weeks).  The recent increase is, in part, due to the backlog created by the exceptionally poor working conditions.

 

The Group is focusing its sales effort on market sectors where activity is strongest, accelerating cost reduction initiatives whilst continuing to invest selectively for future growth.  The targeted growth plans, cost reduction initiatives, strength of the installer order book, resilience of the Commercial end market and the opportunities created by the Group's International growth strategy should continue to mean that Marshalls is well placed to outperform the market. The increased financial and operational flexibility built into the business in recent years allows us to react quickly to changes in market demand. 

 

Marshalls will be announcing its results for the half year ended 30 June 2012 on Friday 31 August 2012.

 

Enquiries:

 

Graham Holden

Chief Executive

Marshalls plc

01484 438900

Ian Burrell

Finance Director

 

Marshalls plc

01484 438900

Jon Coles

 

Brunswick Group

0207 404 5959

 

6 July 2012

 

Note to the Editor:

 

About Marshalls:

 

Established in the late 1880s, Marshalls is the UK's leading manufacturer of superior natural stone and innovative concrete hard landscaping products, supplying the construction, home improvement and landscape markets.  Marshalls provides the product ranges, design services, technical expertise, innovative ideas and inspiration to transform gardens, drives and public and commercial landscapes.

 

Marshalls operates its own quarries and manufacturing sites throughout the UK, including a national network of manufacturing and distribution sites.  As a major plc, Marshalls is committed to quality in everything it does, including the achievement of high environmental and ethical standards and continual improvement in health and safety performance.

 

Forward-Looking Statements:

 

Any statements in this release, to the extent that they are forward-looking, are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the markets in which Marshalls operates.  It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated.  More information about the factors that may affect Marshalls' performance is contained in the Annual Report to shareholders for the year ended 31 December 2011.

 


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