Marshalls paves way to growth

The Elland-based firm reported a “robust” order book and said revenue rose eight per cent to £365m in the 11 months to November 30, despite strong comparatives with the second half of 2014.

Marshalls said the Construction Products Association’s autumn forecast predicts growth in UK market volumes of 3.6 per cent in 2015 and 3.8 per cent in 2016, which represents a slight decrease on the previous summer forecast.

“Notwithstanding this, the group remains well positioned to grow organically, and selectively through acquisitions, and continues to invest in product innovation and service delivery initiatives,” said chief executive Martyn Coffey.

The group said it has seen robust order intake alongside encouraging sales growth in its main markets, whilst overall trading momentum continues to be positive.

Analysts welcomed the news.

Adrian Kearsay, at Panmure Gordon, said: “Marshalls is trading well, benefiting from a positive macro environment in the UK, market share gains and healthy operational gearing. Overall revenues rose eight per cent in the 11 months to November 30. This is impressive given the tough comparatives.

“Marshalls continues to enjoy strong trading momentum and the board anticipates full-year profits to be ahead of expectations.

“With everything continuing to point in the right direction we re-iterate our ‘buy’ recommendation.”

Robin Hardy, at Shore Capital, added: “The strength of the group’s performance in the commercial and public sector division remains impressive with revenues up 11 per cent against a market growing at closer to 3.5 per cent.

“Market share gains are impressive and should continue and with the consumer market likely to rebound within the next two years, there is scope for profits by 2017/8 to be much stronger than current consensus.”

He added that Marshalls should be a major beneficiary of lower oil prices as haulage is a major part of costs. Haulage accounts for around 12 per cent of Marshalls’ total costs.

The group said that sales to the public sector and commercial end markets, which now represent two thirds of group sales, rose 11 per cent.

It said commercial work from water management, street furniture, rail and new build housing continues to increase and it continues to outperform the market in these areas.

Sales to the domestic market, which represent 29 per cent of group sales, rose three per cent.

Adjusting for currency movements, revenues from the international business, which makes up five per cent of group sales, rose two per cent. Following the adverse movement in exchange rates, this translated to a fall of five per cent.

The group said it has made progress developing the international business. It added that the opening of a sales office in Dubai, which will facilitate further sales growth in the Middle East, is now well advanced.

The group’s street furniture, mineral products and stone cladding division reported a 14 per cent rise in revenue, ahead of expectations.

Marshalls paid an interim dividend of 2.25p per share last week.