Marshalls: Revenue at building supplier drops but group ‘cautiously optimistic’ about the future

Housing industry supplier Marshalls has reported a mixed set of results for the first half of the year due to what management called “weak end markets.”

However, despite weakness in the construction market over the past year, the company said it was “cautiously optimistic” about the future.

Marshalls announced revenue of £306.7m in the half-year ended 30th June, a 13 per cent fall from £354.1m in the first half of 2024. 

Marshalls produces three types of products: building, roofing and landscape. Its landscape business, in particular, struggled during the period: revenue fell by 21 per cent to £137m. 

Operating profit rose by eight per cent to £28.9m, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 14 per cent to £50.6m. 

Earnings per share rose by 23 per cent to 6.4p. 

Operating profit benefited from “decisive actions taken in 2023 to reduce costs and capacity”, the company said.

The company said it remained “cautiously optimistic” of a “modest recovery” in its end markets during the second half of the year, “predicated on a progressive improvement in the macro-economic environment”.

“The group has delivered a resilient performance in weak end markets… [it] demonstrates that the strategy of diversification, building on the group’s historic core Landscape Products business, through the acquisition and improvement of less cyclical businesses has resulted in a more balanced group,” chief executive Matt Pullen said. 

“We are undertaking a review of the group’s strategy and have identified a number of opportunities to deliver outperformance over the medium term,” Pullen added.

“These include attractive sustainability-driven markets across bricks and masonry, water management and energy transition alongside a cyclical recovery in our core landscape and roofing businesses, supported by the new Government’s commitment to increase housebuilding significantly,” he said.

“It has been quite the fall from grace for building materials firm Marshalls, which benefited from strong demand during the pandemic as an older demographic with significant disposable income spent heavily on doing up their gardens.

Combined with a decent stream of business from the new-build housing sector, this propelled both the share price and profits to new highs, but subsequently the company has had the kind of hard landing befitting a manufacturer of paving slabs,” AJ Bell investment director Russ Mould said.

“Pressures on household budgets, the property market and the prioritising of spending on other areas like holidays left Marshalls highly exposed. That’s reflected in these latest results with revenue and profit materially lower.

“It’s now the job of CEO Matt Pullen to sort all of this out. He’s had six months to get his feet under the table and has largely focused on stabilising performance, improving cash flow and paying down debt,” Mould added.