Building materials group Marshalls (MSLH) delivered another bleak assessment of the UK market and warned its full-year results would be below previous expectations, sending its shares down as much as 10% to 248p.

Shares in builders’ merchant Travis Perkins (TPK), which is due to report interim earnings tomorrow, dropped 2.6% to 867p, while urban regeneration firm Morgan Sindall (MGNS) also fell in early trading.

‘PERSISTENT WEAKNESS’

Today’s warning isn‘t a big surprise given the continued weakness of the new-build housing market since the firm lowered expectations at the start of May, but Marshalls’ comments on the RMI (repair, maintenance and improvement) market are noteworthy.

Sales for the first half are expected to rise 2% to £354 million thanks to the inclusion of an additional four months of revenue from Marley.

However, on a like-for-like basis sales are seen down 13% due to an 18% fall in revenue at the firm’s core landscape products division, which serves both the new-build and RMI markets and where demand from ‘the more discretionary elements of private housing RMI’ is notably weak.

The building products division, which supplies bricks, masonry and mortars, was more resilient, with revenue down 9%, while the Marley roofing products division reported a 7% drop in revenue with growth in the Viridian solar business partly offsetting weakness in roofing.

The firm put the ‘persistent weakness’ in new-build and private housing RMI down to ‘sustained high levels of inflation, increasing interest rates and weak consumer confidence’.

Despite management action to reduce costs, including closing the Carluke factory and reducing shifts in other facilities, resulting in a loss of 250 jobs, further weakness in the second half means earnings for the full year will miss earlier expectations.

WATCH TRAVIS PERKINS TOMORROW

Builders’ merchant Travis Perkins (TPK) lowered its full-year operating profit forecast in mid-June due to a weak second quarter with volumes in the new-build and RMI market below forecasts.

Like Marshalls, the firm blamed higher interest rates and falling consumer confidence due to higher-than-expected inflation, although it did point to a ‘more resilient’ performance in its commercial, industrial, infrastructure and public sector housing markets.

It also confirmed its Toolstation equipment division was performing in line with expectations both in the UK and Europe, so this will be an area of focus when the firm reports tomorrow.

LEARN MORE ABOUT MARSHALLS

---