A healthy increase in revenue in the four months to the end of April sees shares at hard landscaping expert Marshalls (MSLH) advancing 3.2% to 284.75p as the £550.3 million cap's trading update points to further growth going forward.

Group revenue for the period grew 12% to £127 million, which the group say represents strong comparatives with the same period last year. Sales into the public sector and commercial end markets provided much of the momentum. These areas now account for around 64% of total sales and showed a 17% increase on the same period a year earlier.


The group continues to target those parts of the market where higher levels of growth are anticipated, such as rail, newbuild housing, water management and street furniture. As highlighted when last we covered the stock on 30 April; 'research and development in growth areas like sustainable drainage and emerging smart technology being used in its new generation of street furniture help justify a 2015 consensus price to earnings ratio of 21.1 and make a good investment case compelling.'

Domestic sales meanwhile also reported a lift; rising 6% compared with the prior year period while international revenue also showed a modest uptick, adding 2% in turnover and representing 6% of total group revenue.

Going forward, investors should take heart from the Construction Products Association's Spring Forecast that predicts growth in UK market volumes of 5.5% in 2015, an improvement on their Winter Forecast, and growth of 4.0% in 2016.

So while Marshalls can point to an improving climate and a healthy balance sheet with net debt/EBITDA at around 0.8 times on gearing of 16.8%, it is product innovation that is proving eye-catching.

Sustainable drainage is one area where Marshalls continues to develop and sales in its proprietary ‘mono beany’ linear drainage systems are still expanding. But beyond the group’s innovations in stone and drainage, Marshalls is also developing a range of interactive and intelligent street furniture designed to make public realms more accessible.

Issue Date: 20 May 2015