Marshalls closes Scottish factory as it issues a profit warning
Hard landscaping and building products leader Marshalls has issued a profit warning ahead of the publication of its interim report on 16 August. At the same time it has announced the closure of its concrete products factory in Carluke, Scotland, and a reduction in shifts and capacity at other sites. The Marshalls commercial team has also been restructured.
The changes are expected to result in 250 job losses. This is on top of 150 jobs cut in the second half of 2022.
These actions are expected to deliver annualised savings of approximately £9million, with around 40% of that being realised in the second half of this year. The Board is executing a programme of surplus land disposals, and has continued to focus on efficient working capital management in order to reduce the Group's net debt.
On a like-for-like basis, the Board says Group revenue is likely to be 13% down in the first six months of this year compared with the same period in 2022 (subject to auditor review). Profit is likely to be 27% down at £33million.
In money terms, revenue for the six months ended 30 June 2023 of £354million is 2% higher than in 2022, but includes four months' contribution from Marshalls' purchase of Marley.
The warning has been delivered against the backdrop of challenging market conditions with persistent weakness in new build housing and private housing RMI (repair, maintenance, improvement), which are key end markets for Marshalls.
Sustained high levels of inflation, increasing interest rates and weakening consumer confidence has led the Board to anticipate the Group's performance in the second half will be below its previous expectations.
Marshalls Landscape Products has continued to experience tough market conditions due to its exposure to new build housing and the more discretionary elements of private housing RMI. Revenue for the period was down 20% on last year at £174million. On a like-for-like basis, after adjusting for the disposal of Marshalls NV in April this year, revenues contracted by 18%.
Marshalls Building Products delivered a more resilient performance, supported by demand for bricks, masonry and mortars, offset by weaker volumes in drainage and aggregates, again relating to the lower number of new housing starts. Revenue for the period was £87million, down 9% on 2022.
Marley Roofing Products saw mixed demand across its product offering. Viridian delivered further growth in integrated solar revenues supported by changes in building regulations, which was offset by a weaker performance in roofing, due, again, to lower volumes of new build housing. Revenue for the period was £93million, down 7% on a like-for-like basis.
The Board says: "We have balanced the need to reduce our capacity and cost base in the short term while retaining the flexibility to increase production when demand recovers. The Group has latent capacity across all its businesses that can satisfy materially higher demand than that being experienced in 2023."
While previously anticipating a recovery in market conditions in the second half of this year, the Board is now of the view that an improvement in the second half performance is unlikely given the macro-economic backdrop. The Board now believes performance in the second half will be markedly weaker than the first half, and consequently expects to deliver a result for the full year that is lower than its previous expectations.