Marshalls PLC on Monday cited subdued business activity, as it reported a fall in annual profit and revenue, saying it expects recovery to be more slow than previously anticipated.

The Elland, England-based landscaping products maker said pretax profit dived 40% to £22.2 million in 2023 from £37.2 million in 2022, as revenue contracted 6.7% to £671.2 million from £719.4 million.

Marshalls noted a decline in real wages in the UK, unprecedented pressure on household budgets, and reduced demand in the housing sector, following interest rate increases by the Bank of England in 2023.

‘The impacts have been exaggerated by economic uncertainties and weak consumer confidence, which also saw reduced investment in the non-housing and infrastructure sectors although these remained more resilient in 2023,’ it said.

Marshalls shares were down 9.0% to 264.44 pence each on Monday morning in London.

The company cut its final dividend by 42% to 5.7 pence per share from 9.9p a year prior, reducing the total payout to 8.3p from 15.6p.

Marshalls said that revenue in the first two months of 2024 was lower than in 2023 and reflects the continued weakness seen in the second half of last year.

‘In line with recent sentiment of UK economic and industry forecasts, the board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves. The start of this recovery is now expected to be slower and more modest than previously assumed,’ the company explained.

Therefore, Marshalls believes that revenue in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023.

More positively, the company said: ‘The board remains confident that actions taken to improve efficiency and flexibility, together with a more diversified and resilient portfolio have strengthened the group. With clear long-term structural growth drivers and attractive market growth opportunities, the group is well positioned for relative outperformance in the medium term, and this will underpin a material improvement in profitability as end markets recover.’

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