Marshalls downgrades FY outlook, cites 'challenging end markets'

Marshalls downgraded its profit and revenue outlook for 2024 on Monday and posted a slump in full-year profits and revenue as the landscape products manufacturer was hit by "challenging end markets".

In the year to the end of December 2023, adjusted pre-tax profit fell 41% to £53.3m on revenue of £671.2m, down 7% on the previous year.

The company declared a total dividend for the year of 8.3p a share, down from 15.6p.

Marshalls said it had been a "challenging" year for the group as a weak macroeconomic backdrop impacted key end markets, leading to a drop in sales volumes, revenues, and profitability.

"Macro-economic pressures and uncertainty have continued to impact the construction industry in 2023, with significant cost inflation in the UK economy and progressive base rate increases by the Bank of England, leading to falling real wages, which has put unprecedented pressure on household budgets, and resulted in reduced demand in the housing sector," it said.

"The impacts have been exaggerated by economic uncertainties and weak consumer confidence, which also saw reduced investment in the non-housing and infrastructure sectors although these remained more resilient in 2023."

Marshalls said the CPA estimated that output in the UK construction industry contracted by 6.4% last year, with reductions of 17% and 11% in new build housing and private housing repair, maintenance and improvement (RMI), respectively, which are key end markets for the company.

"These factors resulted in a reduction in demand for the group's products, which had a significant impact on its profitability."

Revenue in the first two months of the year has been lower than 2023, reflecting continued weakness in the second half of last year, it said.

"In line with recent sentiment of UK economic and industry forecasts, the board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves," it said.

"The start of this recovery is now expected to be slower and more modest than previously assumed. Therefore the board believes that revenues in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023."