Marshalls suffers a £9m sales hit as bad weather takes toll

Marshalls' chief executive Martyn Coffey
Marshalls' chief executive Martyn Coffey

Elland-based paving specialist Marshall’s said the recent severe weather conditions have had a significant impact on sales.

The snow and ice made ground working difficult and its factories had to be closed for a number of days.

The impact of the weather has resulted in a £9m reduction in sales, although sales in both the domestic and public sector and commercial markets were strong in the weeks not impacted by the weather.

The group said group revenue for the four months to April 30 rose 10 per cent to £149m.

Marshalls said its snow problems were in common with the rest of the industry. Sales in the domestic market, which represents 29 per cent of group sales, were significantly impacted by the severe weather and were down 2 per cent compared with the same period in the prior year. The survey of domestic installers at the end of April revealed order books of 10.9 weeks, down from 12.7 weeks in the same period of 2017.

Sales in the ​p​ublic ​s​ector and ​commercial market, which represent​s​ 66 per cent of ​g​roup sales, ​rose 18 per cent compared with the same period in the prior year.

​The group’s chief executive Martyn Coffey, pictured, said​ the firm is making good progress​​ in executing the 2020 ​s​trategy and the self help programme to drive organic growth​.

​Marshalls ​​is target​ing​ parts of the market where higher levels of growth are anticipated, including ​n​ew ​b​uild ​h​ousing, ​w​ater ​m​anagement and ​r​ail.

​Mr Coffey said ​CPM Group, which was ​bought last October, ​is trading strongly and the integration is progressing in line with expectations.

The Construction Products Association has slightly reduced its 2018 forecast in ​its​ recent Spring Update, which reflects wider economic uncertainty. ​Mr Coffey said​ that Marshalls’ innovative product range and strong market positions mean the ​g​roup is well placed to deliver continued future growth.

​Despite​ the effects of the severe weather, ​he said the group is confident of delivering its 2018 expectations. Analyst ​Graeme Kyle at Shore Capital said: “Revenue growth of 10 per cent year on year was slightly lower than we and the market expected.

“Management stated there was a severe weather impact of £9m which explains the entire shortfall. Importantly, and despite this impact, 2018 guidance has been maintained with management confirming that although full year sales will be £9m lighter than anticipated, operating costs have been managed to offset this – examples include a staff hiring freeze in certain departments and a reduction in marketing expenses.

​“We suggest any major sell-off in the shares on the back of this trading statement could be a buying opportunity for investors.​“​

​Analyst Clyde Lewis at Peel Hunt added: “As expected poor weather in the last few months has impacted revenue​, but despite this impact the board is still confident of meeting expectations.

​“​Last October’s acquisition of CPM is bedding in well and trading has been strong. Overall, we leave forecasts and our target price unchanged. Buy.​”​

Before the bad weather, Marshalls had ​reported a strong start to 2018 as sales leapt 18 per cent ​in the first two months of the year.

It is seeing strong demand from older people who have retired.​ The firm said​ ​that well over half of its customers are over 55, they own their own homes and they want to upgrade their house rather than move.