Bricks-to-tiles manufacturer Marshalls experienced a significant drop in profits in H1 2024, reflective of ongoing industry challenges.
- The company’s pre-tax profits decreased by 20% compared to the previous year, influenced by reduced turnover.
- A plunge of 13% in turnover was observed, attributed to lowered landscape product sales.
- Chief Executive Matt Pullen cited ‘weak end markets’ but highlighted strategic responses that mitigated some negative impacts.
- Despite reduced revenue, Marshalls achieved a 111% operating cashflow conversion and a substantial reduction in net debt.
In the first half of 2024, Marshalls, a leading manufacturer of bricks and tiles, faced a challenging economic landscape. The company recorded a 20% decrease in pre-tax profits from the year prior, underpinned by a 13% slump in turnover. This decline was primarily due to a drop in landscape product sales, a consequence of continuing low levels of new-build housing and private housing repair, maintenance, and improvement activities.
Matt Pullen, Marshalls’ Chief Executive, attributed these financial pressures to ‘weak end markets’. However, he remained optimistic, noting that the company’s strategic actions had mitigated the full impact of the downturn. Marshalls’ diversification strategy, which aimed to broaden its business beyond its traditional landscape products, was cited as a key factor in achieving a more balanced business model. The company focused on cost control and effective working capital management, resulting in an impressive 111% annualised operating cashflow conversion and a reduction in net debt by £28.8m.
The company’s revenue streams are diverse, with landscape products comprising approximately 45% of revenues drawn from commercial and infrastructure sectors, 30% from new-build housing, and 25% from private housing RMI. Across all these areas, revenues contracted in the first half of the year. The new-build housing sector, in particular, exhibited weak demand, further exacerbating financial pressures. Pullen acknowledged that Marshalls had experienced some loss in market share but indicated efforts were underway to counteract this by rebuilding distribution channels through mutually beneficial trading agreements.
The building products division, accounting for around 60% of new-build housing and 30% from commercial and infrastructure, similarly suffered a 6% reduction in revenue. This decline was, however, partially offset by a slight uptick in sales of drainage products. Looking forward, Marshalls plans to hold a capital markets event in November to elaborate on its new five-year strategy. The company’s future outlook includes targeting growth in sustainability-driven markets, such as bricks, masonry, water management, and energy transition, as well as anticipating a cyclical recovery in core landscape and roofing businesses.
Marshalls remains resolute in facing market adversities by harnessing strategic initiatives to stabilise and evolve its business.
