- Weaker new-build and RMI markets blamed
- Effects of mini-budget still being felt
- Shares erase six months of gains
Shareholders in building products maker Marshalls (MSLH) were brought down to earth with a bump after the firm posted disappointing sales for the year to date and warned full -year results would miss expectations.
The shares dropped to the bottom of the FTSE 250 table, losing as much as 46p or 15% to 252p and undoing most of the gains from their October 2022 low.
WHY ARE MARSHALLS’ SHARES DOWN?
Ahead of its AGM tomorrow, the paving and tiling group reported revenue of £227 million for the first four months of this year, an increase of 12% including the acquisition of Marley but a 14% fall on a like-for-like basis.
The firm blamed the slowdown in underlying sales on the ‘uncertain macro-economic climate’, a reduction in new house building and continued weakness in private housing RMI (repair, maintenance and improvement) activity.
The landscape products business suffered a 21% fall in revenue to £110 million due to its exposure to new-build housing and ‘the more discretionary elements’ of private housing RMI, while building products suffered a 9% fall in sales to £55 million on lower drainage and aggregate sales to the new-build market.
Marley, the roofing product business acquired in April 2022 for £535 million, saw sales fall 6% on last year, partly due to a reduction in manufacturing capacity.
SHARPER SLOWDOWN MEANS LOWER PROFITS
Although management see the firm delivering profitable growth ‘when market conditions improve’, the slowdown in new-build activity has been worse than anticipated and profits for this year are now seen below previous expectations.
The company’s original forecast was based on estimates from the CPA (construction products association) of an 11% reduction in new-build housing, but the trade body revised its outlook earlier this month to a 17% decline in activity due to last year’s ‘mini-budget’, the spike in mortgage rates which followed and the imminent withdrawal of the Help to Buy scheme.
LEARN MORE ABOUT MARSHALLS
