Trading Update

RNS Number : 5189Y

Marshalls PLC

18 May 2016

 

Trading Update: 18 May 2016

Trading Performance

The underlying indicators within the business remain strong and the Board is confident of achieving its expectations for 2016 through continuing good operational margin performance.

Marshalls' UK revenue for the 4 months ended 30 April 2016 was up 1 per cent at £120 million (2015: £119 million). This increase is against strong comparatives for 2015 and reflects a slight softening in Commercial sales over the last 2 months.  The Group has maintained its market share during this period although some customer projects have been delayed in response to short term uncertainty in the wider economy as highlighted by the Construction Products Association's ("CPA") most recent industry data.  

Sales in the Public Sector and Commercial end market, which represented approximately 64 per cent of Marshalls' total sales, were in line with the prior year period. The Group continues to target those parts of the market where higher levels of growth are anticipated, such as Rail, Newbuild Housing, Water Management and Street Furniture.

Sales in the Domestic end market, which represented approximately 31 per cent of Marshalls' total sales, were up 4 per cent compared with the prior year period. The survey of domestic installers at the end of April 2016 revealed order books of 12.4 weeks (2015: 10.6 weeks) and compared with 10.5 weeks at the end of February 2016.  At 12.4 weeks, this is the highest order book to be reported at this time of year.

The pipeline for major UK infrastructure projects remains strong and the construction schedule has extended.  Furthermore, orders received in the Commercial end market, representing almost £4 million more than sales in the period, have not been fulfilled as expected reflecting caution from clients regarding the wider economy.  The wet ground conditions early this year have deferred progress on many construction sites in both Commercial and Domestic end markets.  Whilst local government landscape spend is subdued, this should eventually return.  Indian Sandstone import prices have fallen over the year, however, we reduced our prices and thus our revenue and have maintained margins.  The market in Europe remains challenging and International revenue for the 4 months ended 30 April 2016 represented 5 per cent (2015: 6 per cent) of Marshalls' total sales.

The Group continues to deliver strong operational cash flows through the continuation of the close control of inventory and the effective management of working capital. Net debt at 30 April 2016 was £33.5 million (2015: £60.7 million).

A key focus of the 2020 Strategy announced in March this year is to deliver organic growth through capital investment projects and operational efficiency initiatives; these initiatives are progressing well.  Targeted bolt-on acquisitions are expected to complement the organic growth within the 2020 Strategy and progress continues to be made in this area.

Outlook

The CPA's Spring Forecast predicts growth in UK market volumes of 3.0 per cent in 2016 and growth of 3.6 per cent in 2017.  This reflects a slight downward revision from the Winter Forecast although the CPA continues to highlight strong fundamentals across the Construction sector.

Marshalls remains well placed to deliver the growth initiatives set out in the 2020 Strategy and the Group continues to derive benefits from its operational gearing together with driving through sustainable cost reductions and improvements in operational efficiency.

The Board is confident of achieving its expectations for 2016 and believes the outlook for the Group continues to be positive.

Enquiries:

Martyn Coffey	Chief Executive	Marshalls plc	[phone]
Jack Clarke	Finance Director
Andrew Jaques		MHP Communications	[phone]
James White

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, and has operations in Belgium and sales representation in other international markets.  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 2015.

 

END

 

 

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