In a trading update for the quarter ended 30 April, building materials group Marshalls (MLSH) said its domestic end market experienced a sharp 8% fall in like-for-like sales.

Management blamed the reduction on reduced installer capacity in March and April due to tough comparatives in 2021 when the country was in lockdown.

Although the firm said it expected things to normalize over the rest of the year, investors marked the shares down 9% to 537p over worries of a domestic slowdown.  The shares have lost 19% over the last six months.

RESILIENT AGAINST TOUGH COMPARATIVES

Overall revenues grew 7% to £201 million despite tough comparatives including record sales achieved in March and April 2021. The company said this was achieved with the help of price increases at the start of the year.

The Public Sector and Commercial end market grew revenues by 14% to £137 million with strength in Civils and Drainage and Bricks and Masonry particularly strong.

The company’s focus continues to remain in the areas with the fastest expected growth such as New Build Housing and infrastructure projects in Road, Rail and Water Management.

MARLEY TRADING AHEAD OF PLAN

Marshalls completed the £535 million acquisition of Marley Group on 29 April and said trading in the first four months of the year was ahead of plan and 2021 comparatives.

Marley is a leading manufacturer and supplier of pitched roof systems. Marshalls is focused on exploiting its operational and manufacturing expertise to leverage opportunities within the enlarged group.

Going forward the group will report Marley Roofing Systems under separate segments along with Marshalls Landscape Products and Marshalls Building Products.

The company confirmed its confidence in achieving its 2022 expectations which have increased to include ‘a material contribution’ from Marley acquisition.

EXPERT VIEW

Shore Capital analyst Graham Kyle noted the risk of a broader UK economic slowdown later this year.

Kyle commented: ‘A broader slowdown in UK consumer activity this year could lead to order cancellations, and the order book may normalise around 10-12 weeks due to this.

‘We are in the process of adjusting our models to include Marshalls’ recent acquisition of Marley’ added Kyle.

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Issue Date: 11 May 2022