Builders’ Merchants News – Marshalls shows resilience, shows six-month results

The financial results were positively influenced by decisive actions taken in 2023 to reduce costs and increase efficiency.

Marshalls plc, a leading developer of sustainable solutions for the built environment, announces its results for the half-year ended 30 June 2024.

The results show:

• A Group resilient to end-market crises, with the impact partially mitigated by decisive management actions and the benefits of a diversification strategy
• Landscape Product Performance Is Hard – More Self-Help Actions Are Being Implemented at a Rapid Pace
• Strengthening the balance sheet by further reducing net debt
• The Management Board believes that the result for 2024 will be broadly in line with its previous expectations
• A capital markets event in November 2024 aimed at identifying medium-term growth opportunities.

Financial highlights

• The decline in Group revenue was mainly due to Landscape Products, reflecting continued low levels of spending on new residential construction and the repair, maintenance and improvement of private homes.
• The financial results were positively influenced by decisive actions taken in 2023 to reduce costs and increase efficiency.
• Adjusted operating cash flow conversion was 111% year-on-year, reflecting disciplined working capital management
• Strong balance sheet with net debt reduction year-on-year of £28.8m.

The Management Board remains cautiously optimistic, expecting a moderate recovery in the target markets in the second half of the year, based on a gradual improvement in the macroeconomic environment.

In light of these circumstances, and given the decisive management actions taken in 2023, the Board believes that full year pre-IFRS16 net profit and debt will be broadly in line with previous expectations.

Matt Pullen, Chief Executive, said: “The Group has delivered consistent performance in weak markets. The first half performance is encouraging and demonstrates that our diversification strategy, building on our historic core Landscape Products business through acquisitions and the enhancement of less cyclical businesses in recent years, has delivered a more balanced Group.

“In addition, we continue to focus on tight cost and working capital controls. We are pleased to report an annual operating cash flow conversion of 111% and an annual net debt reduction of £28.8 million, which remains a key capital allocation priority.

“Although market conditions have impacted Landscape Products’ performance, I am confident that the segment’s performance can be significantly improved through a series of self-help measures that we are implementing at a rapid pace. I am excited about the segment’s prospects in the market recovery as it will benefit significantly from operating leverage.

“We are reviewing the Group’s strategy and have identified a number of opportunities to deliver improved performance in the medium term. These include attractive sustainability-focused markets in bricks and masonry, water management and the energy transition, as well as a cyclical recovery in our core landscape and roofing businesses, supported by the new government’s commitment to significantly increase residential construction.

“We remain cautiously optimistic about a modest improvement in the Group’s end markets in the second half of the year, based on ongoing improvements in the macroeconomic environment. Against this backdrop, and with the benefit of ongoing management actions, the Board believes that profitability and pre-IFRS16 net debt for the full year will be broadly in line with its previous expectations.”