Marshalls confident in full-year performance after Q3 improvement

The FTSE 250 company said the figure included revenue contributions from Marley for an additional four months, adding that on a like-for-like basis, revenue contracted by 12%.

In the third quarter, Marshalls said it experienced a 9% contraction in revenue on a like-for-like basis, improving from the 13% reduction in the first half.

The company's management said it had taken decisive actions in response to challenging market conditions, which were now largely complete, with its expectations for the full year unchanged.

Marshalls Landscape Products revenues totalled £257m for the period, down 17% from the prior year.

Adjusted for the disposal of Marshalls NV in April, the like-for-like revenue contraction was 15%.

Notably, the rate of contraction in the third quarter slowed to 8%, influenced by softer prior-year comparisons and a shift towards commercial products, which outperformed those in the domestic market.

Marshalls Building Products revenue meanwhile dropped to £133m, making for an 11% reduction compared to 2022.

In the third quarter, the rate of contraction increased to 14%, which the board put down to a slowdown in the bricks and mortars businesses, which were relatively stable in the first half.

Marley Roofing Products reported revenues of £138m for the period, showing a 7% contraction on a like-for-like basis.

That performance was consistent with the first half, but in the third quarter, the decline in traditional roofing business was offset by weaker performance from Viridian Solar, attributed to a soft new build market.

Marshalls management said its actions included factory closures, capacity reductions, and commercial team reorganisation, in a bid to improve agility and reduce costs.

Those actions, largely completed by the end of the third quarter, were expected to yield annualised savings of around £9m.

The company said it was also focussed on reduced capital expenditure, land disposals generating £6m to date, and efficient working capital management to reduce net debt.

Importantly, while reducing capacity and costs in the short term, Marshalls management said it remained flexible to increase production when demand recovered.

The group said it had latent capacity across its businesses to meet higher demand levels than it was currently experiencing.

Marshalls maintained a robust balance sheet, reporting pre-IFRS 16 net debt of £190m as of the end of September, down from £222m in September 2022 and £185m in June.

The company's ongoing priority was to reduce leverage, with the board confident in achieving a reduction in net debt for the full year.

“Trading in the third quarter was in-line with the board's expectations which anticipated a sustained period of lower volumes,” Marshalls said in its statement.

“The board does not expect any material changes in current trading patterns during the fourth quarter of the year and therefore remains confident of achieving a result that is in-line with its expectations for 2023.”

At 0919 BST, shares in Marshalls were up 7.22% at 212.29p.

Reporting by Josh White for Sharecast.com.