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Uncertainty drags on Marshalls
LANDSCAPE products specialist Marshalls says the market is "bumping along the bottom" with uncertain trading making it hard to predict a recovery.
The Huddersfield-based company, which is the UK's leading supplier of paving and natural stone, saw revenue slump 19 per cent to 166m in the six months to the end of June, against a comparatively strong period in 2008 when revenues hit 211m.
But Marshalls insisted it is in a good position to ride out the recession and take advantage when an upturn arrives, thanks to a recently completed 34m rights issue and "decisive action" on costs – reducing capacity by a third, slimming stock levels and cutting more than 400 jobs.
"The stuff that we are in control of is on track," said chief executive Graham Holden.
Thanks to the fundraising and cost cuts the company brought net debt down to 74m at the end of June, compared to 111m six months earlier, slightly better than it expected. Analysts expect net debt to be between 60m and 65m by the end of the year.
Marshalls said the domestic market has been helped recently by good weather, with installer order books steady against two months ago, showing 7.1 weeks' work.
But Mr Holden said while dry weather will help margins, "the reality is the overall economic trends overshadow anything in terms of positives we might see from the weather".
"Sales demand remains uncertain with no clear pattern emerging," the company said in a statement.
"What we are seeing is we might have a good week and then we might have a bad week," said Mr Holden. "We are not getting a consistent trend.
"Bumping along the bottom is not a bad description. Until there's some certainty about you are going to be more cautious."
In the public and commercial sectors, where Marshalls supplies everything from local authority street works to shopping centre developments, "lead indicators predict a levelling out during the second half of the year".
The company has been hit by weakness in the retail sector and is wary about falling public sector spending as Government looks to conserve cash.
However, Mr Holden said "the one bright spot" is the 2012 Olympics, where orders are starting to roll in.
Marshalls sponsored the recent Chelsea Flower Show and is mulling over whether to renew its sponsorship.
It won a Silver-Gilt medal for its show garden, The Marshalls Living Street.
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Sunday 12 February 2012
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