Marshalls profits hit by slowdown in construction sector
- Marshalls said adjusted operating profit fell 19% to £34m in the first half of the year
Marshalls’ profits fell sharply in the first half of 2024, due to weak demand for the landscaping industry and an overall slowdown in construction.
The building materials company said adjusted operating profit fell 19 percent to £34 million in the six months to June.
Revenue fell 13 per cent to £306.1m as the landscape products segment struggled with lower demand for new-build homes and lower spending on residential renovations.
Lower profit: Building materials company Marshalls said its adjusted operating profit fell 19 percent to £34 million in the six months ended June
Higher interest rates and pressure on the cost of living have reduced Britons’ interest in improving and buying their homes over the past two years.
The strict British planning rules also continue to have a major impact on the region, making it more difficult to realise large-scale housing developments.
Still, Marshalls CEO Matt Pullen said he is “cautiously optimistic” about a recovery in end markets in the second half of 2024, contingent on “gradual improvement in the macroeconomic environment.”
The Yorkshire-based company also expects annual profits and net debt to be ‘broadly in line’ with previous forecasts.
The Bank of England recently cut the UK base rate by 0.25 percentage points to 5 percent, the first cut in more than four years, after UK inflation hit its 2 percent target.
Many lenders, including NatWest, Virgin Money and Leeds Building Society, responded by cutting their mortgage rates for home buyers.
Marshalls benefited greatly from the lockdown period, as low borrowing costs and lockdown measures meant Britons had more money to spend on renovating their homes.
Trade received an additional boost from a reduction in transfer tax, the rise of working from home and the demand for more spacious homes.
Mark Crouch, market analyst at eToro, said Marshalls is currently “facing some precarious conditions, falling revenues and rising costs, in a sector that is struggling to get going and is in desperate need of a kickstart”.
He added: ‘Marshalls has not sat idle and has taken decisive action. They have laid off staff and drastically reduced shareholder returns to improve efficiency and reduce the company’s debt.’
Marshalls reduced its net debt by 16 per cent year-on-year to £155.8 million in the first six months of 2024, while maintaining its interim dividend at 2.6 pence per share.
Marshall’s shares were down 1.2 percent at 336p on Monday morning, although they are still up around 31 percent over the past 12 months.
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