Marshalls PLC sees full year in line but landscaping outlook remains tough
Marshalls PLC (LSE:MSLH) announced robust growth in interim profits, boosted by April’s acquisition of roofing company Marley, and predicted full-year results in line with market expectations despite private households reigning in spending.
The paving specialist said its building products business saw a strong performance in first half, but the landscaping business was hit by softer demand in the private housing market for repair, maintenance and improvement (RMI).
Despite the uncertain geopolitical outlook and rising cost of living, full-year results are expected to meet market expectation, as a positive outlook for the building products division and Marley offsets tougher conditions for its landscaping business, the FTSE 250 company said in its earnings release .
Revenue for the first half to 30 June 2022 was £348.4mln, a rise of 17% on the same period last year and up 7% on a like-for-like basis.
Adjusted operating profit rose 15% to £48mln, on the back of a strong performance in building products.
The company lifted its dividend 21% to 5.7p.
Marshalls Landscape Products saw revenue drop to £216.9mln in the first half from £218.8mln last year. This followed a weaker market for private housing RMI as households tightened their pursestrings in the face of cost-of-living pressures.
This weakness is set to continue in the second half as rising inflation puts further pressure on household budgets, the company predicted.
At Marshalls Building Products, revenue grew 21% to £95.9mln, following particularly strong demand for bricks and masonry due to a market shortage.
The company expects the market for building products to remain robust in the second half given the positive outlook for its end markets, with the Construction Product Association (CPA) forecasting growth in construction output of 2.5% in 2022 and 1.6% in 2023.
The company said the integration of Marley is on track and that the subsidiary’s revenues in the post-acquisition period were 18% higher than the corresponding period in 2021.
Commenting on the outlook, Marshall’s chief executive Martyn Coffey acknowledged the tough economic climate with high inflation impacting consumer confidence.
“Notwithstanding this, the board’s expectations for the group as a whole remain in line with market expectations for the full year, with the more positive backdrop within Marshalls Building Products and Marley expected to balance the continuation of tougher trading conditions in Marshalls Landscape Products, which has greater exposure to the discretionary element of private housing RMI.”
Net debt stood at £252.3mln at the end of June, up £52.4mln a year earlier, reflecting the bank funding implemented to partially fund the acquisition of Marley