Jobs fear as dismal weather knocks £10m off sales at Marshalls

Graham Holden, managing director of the Huddersfield-based company, which employs around 2,300 people, said there may be “a small reduction” in staff.

The landscaping materials firm said its first-half revenue fell by 5 per cent to £167m, down from £177m a year earlier. The weather impact resulted in an estimated reduction in sales in the second quarter of around £10m.

Mr Holden told the Yorkshire Post: “No-one is happy that we’ve lost £10m sales but in overall terms we are still selling £170m. As a country we are in recession and inevitably it is therefore quite challenging. And then on top of that you’ve got the weather.”

The firm said it planned to cut expenses and inventories to preserve cash and reduce the impact of lower sales, which would result in a one-off cash charge of £7m. Marshalls also said it would record a separate £12m charge related to asset impairments and asset write downs.

Mr Holden said of the contingency measures: “What this is is a large number of what you might call smaller actions which add up in total to a significant number. It’s right across the board, every area of the business, every area of spending, right throughout.”

He added: “Inevitably there are consultations going on that may see a reduction in employment. But it’s relatively small numbers and a small percentage overall.” Mr Holden said he could not comment on specific numbers at this stage.

Mr Holden said that, as an example, the range of measures could encompass better efficiency in purchasing. Production has been reduced at Marshalls’ natural stone walling business in Derbyshire, added Mr Holden.

He said there would be no works closures in the core business, adding: “We are retaining our national coverage”

The measures build on cost-cutting actions taken in 2008/09, which included the closure of four works in the core business.

In today’s trading update, Marshalls said: “The group is focusing its sales effort on market sectors where activity is strongest, accelerating cost reduction initiatives whilst continuing to invest selectively for future growth.

“The targeted growth plans, cost reduction initiatives, strength of the installer order book, resilience of the commercial end market and the opportunities created by the group’s international growth strategy should continue to mean that Marshalls is well placed to outperform the market.”

Sales to the domestic end market, for which the quarter was an important trading period, declined 14 per cent on compared with the previous year, the group said in its trading update for the half year.

Underlying sales to the public sector and commercial markets, which represent around 64 per cent of Marshalls’ sales, were two per cent below last year but are broadly in line with expectations, the group said.

Marshalls said continued progress has been made with its international business, which represents 5 per cent of group revenues.

“We actually have a small business in Belgium, so we produce some paving in Belgium and we also send product that we make, quite a bit of it in Yorkshire actually, over to Europe and it gets sold to the consumer market in Belgium, Holland, France Germany.

“It’s a small business in a very big market and it is managing to grow its sales even though the markets are not easy over there either”, said Mr Holden.

Meanwhile, the group’s street furniture business is growing and in security products, it has launched a range of products designed to stop vehicles from getting close to key buildings.

Mr Holden added: “The one area of our business that is certainly growing is water management products, drainage and drains related products. We’ve certainly had lots of rainfall so those solutions are very much in people’s minds. It’s a small part of the product portfolio but it’s one that’s certainly growing.”

Mr Holden said: “Through the recession what we managed to do is improve our position. We have a very good share of the market in our products and we have managed to continue to develop the business through the recession. The weather is a bit of a set-back but it’s the fact it’s exceptionally wet that’s the problem.

“We get rainfall in this country it’s just the volume of it in a short space of time that’s the problem. And it just slows people who are installing the products. “But generally speaking the business is well invested, it’s got a strong balance sheet, the people in the business are doing an excellent job, and on the basis of all those things I think medium-term we are confident about the future.”

Analysts at Numis Securities said that the update had led to a reduction in its profit forecasts, but it said that “prompt action” by management to cut costs offsets much of the impact and will benefit 2013 to a greater degree.

The company will report its half-year result on August 31.