Marshalls warns on profit as households cut back on landscape projects

Paving stone specialist Marshalls has issued a profit warning as the cost of living forces households to cut back on landscaping projects.

The company, which has benefited from homeowners upgrading their gardens and driveways during the pandemic, said it has seen a “clear” decline in demand in recent months.

It joins a slew of other construction merchants, from Travis Perkins to Leyland’s owner Grafton, warning that things have slowed down.

The West Yorkshire company said its landscape division was still facing ‘tough’ trading conditions, with sales falling 6 percent since the start of the year to £311 million.

The drop in demand accelerated sharply in the past three months as households curbed their spending on outdoor projects.

Sales in the last quarter were down 16 percent compared to the same period last year — much faster than the 1 percent drop in the first quarter.

Marshalls responded to the slump in demand by reducing their production output, which they say will help cut operating costs by around £10 million a year from early 2023.

For now, however, it expects the drop in demand to impact earnings, which are expected to come in slightly below the lower end of the current range of market expectations of £95 million to £101 million.

Despite trading in the Construction Products Division, which produces a range of building supplies from bricks to drainage, it remains robust.

The division’s revenues were up 22 percent to £149 million in the nine-month period, with particularly strong growth in the bricks and masonry business.

Marley Group, the recently acquired manufacturer of pitched roof systems, saw sales rise 9 per cent to £84 million, but while growth has continued to outperform expectations, growth has been subdued.

Overall, group sales rose 20 per cent to £544 million in the nine months to the end of September. Excluding Marley, growth was 4 percent.

Marshall’s Shares fell 18.4 percent to 246.5 pence in morning trading on Friday. They are down 65 percent in the past year.

Marshalls shares are down about 65% in the past year

The group supplies outdoor space products for both residential and commercial projects.

Housing projects vary from helping to realize new housing projects to natural stoneware for individual homes.

Past commercial projects have included a new look for New Bond Street in London, public banks and even highway drainage.

But households are cutting back on unnecessary spending as they face financial pressures from rising inflation.

Meanwhile, the housing market is showing further signs of slowing amid rising mortgage rates, with the latest report from Halifax showing house prices falling 0.1 percent in September.

This summer, construction trader Travis Perkins issued a thinly veiled profit warning, while Leyland owner Grafton warned that demand had fallen from “exceptional” levels during the pandemic.

Russ Mold, investment director at AJ Bell, said it’s not hard to see why many households in the present day may decide not to shell out thousands of pounds to spice up their front-wheel drive vehicles.

“In recent years there has been a trend for households to dig up the front yard and replace the weeds with paving stones so they can park their cars and not have to worry about traffic controllers,” he says.

‘As a paving stone specialist, Marshalls enjoyed thriving sales, partly thanks to the numerous activity among its business customers. Some of this sales momentum is now gone.

“The landscaping industry is highly exposed to repair, maintenance and improvement trends in the private housing market, and demand is declining.”