Marshalls plc

Pre-Close Trading Update: 18 January 2022

Trading performance

Group revenue for the year ended 31 December 2021 was £589 million (2020: £469 million; 2019: £542 million), which is 26 per cent ahead of the 2020 comparative. This represents an increase of 9 per cent compared with the same period in 2019, being the last comparative period which was unaffected by COVID-19. Revenue growth in the second half of the year was increasingly strong and was 11 per cent ahead of the comparative figures for 2019.

Sales in the Domestic end market, which represented approximately 28 per cent of Group sales, were £167 million. This represents an increase of 30 per cent compared with the prior year and is up 18 per cent compared with the same period in 2019. The survey of domestic installers at the end of October 2021 revealed that order books remained healthy at 16.7 weeks (2020: 20.2 weeks).  

Sales in the Public Sector and Commercial end market were £389 million and represented 66 per cent of Group sales. This represents an increase of 26 per cent compared with the prior year and is up 4 per cent compared with the same period in 2019. The comparison with 2019 increases to 6 per cent after adjusting for the impact on sales caused by the planned reduction in Marshalls Mortars and Screed sites in the first half of 2020.

Sales in the International business, which includes Marshalls NV in Belgium, were up 6 per cent compared with the prior period and 23 per cent compared with 2019. International sales represented 6 per cent of Group sales in the period.

This positive trading performance across the Group has been achieved despite the continued backdrop of sector-wide raw material and labour shortages. These operational challenges have given rise to significant cost inflation, additional overtime costs to cover COVID-19 related absenteeism and some customer project delays. However, cost increases were recovered through a mid-year price increase and a further price increase has been implemented successfully in January 2022. The Group has strong supplier relationships and our centralised procurement team continue to actively manage the supply chain to create flexibility and reduce risk. Underlying market demand continues to be strong and the business has been experiencing trading volumes that are outperforming the Construction Products Association's growth forecasts.

Balance sheet and liquidity

As at 31 December 2021, the Group had net debt of £41 million (2020: £76 million; 2019: £60 million) and net positive cash of £0.1 million on a pre-IFRS 16 basis (2020: £27 million; 2019: £19 million; both net debt). This reflects the improved trading performance and our continued close monitoring of cash flows. The Group retains a strong balance sheet supported by a flexible capital structure and maintains good headroom against bank facilities, which will support its investment priorities going forward.

Dividend

The 2021 interim dividend of 4.70 pence per share, announced on 19 August 2021, was paid on 1 December 2021 to shareholders on the register at the close of business on 22 October 2021.

Outlook

Supported by strong market demand in the last quarter of the year, the Board is revising its trading expectations for the year ended 31 December 2021 to be slightly ahead of its previous view.

In spite of the ongoing supply chain challenges, trading remains positive and order intake in recent weeks is 13 per cent higher than the prior year in volume terms, excluding the positive impact of price increases. The outlook for the construction market remains positive, particularly in our key target markets of New Build Housing, Road, Rail and Water Management. The underlying indicators remain strong in each of these market areas. The Group's business strategy is underpinned by strong market positions, focused investment plans and an established brand.

The Board intends to issue its full year Preliminary Announcement on 17 March 2022.

Notes

1.    In order to provide a more relevant performance commentary, comparison in this statement has been made to the corresponding period in both 2020 and 2019, the latter considered to represent a more meaningful pre-COVID-19 baseline for performance comparisons.

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About Marshalls:

Established in the late 1880s, Marshalls is the UK's leading external landscaping product business from design, planning and engineering to guidance and delivery. Marshalls supplies the domestic and commercial hard landscaping markets and its products include paving, block paving, kerb and edgings, drainage and water management solutions, protective street furniture, lighting, concrete bricks, masonry, walling and mortar.  Marshalls provides the product ranges, design services, technical expertise, innovative ideas and inspiration to transform gardens, drives and public and commercial landscapes.

Marshalls has manufacturing plants, quarries and distribution sites across the UK and its unique national network ensures proximity to customers and an efficient logistics footprint. Marshalls also has a manufacturing and trading operation in Belgium. 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 2020.