Marshalls outperforms the market

'‹'‹Landscape products firm Marshalls reported a big jump in half year profits '‹as more people spend their pension pots'‹ on home improvements.
Martyn Coffey, CEO of MarshallsMartyn Coffey, CEO of Marshalls
Martyn Coffey, CEO of Marshalls

The Elland-based firm said pre-tax profits rose 16 per cent to £29.1m in the six months to June 30 and the group is confident it can deliver its '‹predicted results for 2017'‹ as it outperforms the market'‹.Chief executive Martyn Coffey said'‹ domestic sales rose 17 per cent, partly due to the new rules on pension fund release'‹.'‹ The average cash withdrawal from pension funds is around £9,000. The average cost of an installed driveway or patio is between £5,000 and £6,000 and '‹Marshalls said this '‹is a popular use of pensions release funds.'‹"Our customers tend to be over 55 and home owners," said Mr Coffey. "People are moving less often. Stamp duty has been blamed for that'‹. So people are investing in their houses rather than moving."'‹Analyst Robin Speakman at Shore Capital said: "Marshalls has published a solid set of interim results and the board are confident of delivering expectations for the full year. "These results should be taken well by the market. Group revenues were 8 per cent higher at £219.1m."'‹Mr Speakman said that domestic customers are the engine for both organic revenue and margin growth. "The UK domestic order book remains healthy at 11.9 weeks," he added. "Again, Marshalls highlight early pension withdrawals and pent up demand as key drivers of growth. We note that the strong performance of Marshalls in this space is in contrast with replacement window firms Epwin and Safestyle who both recently warned of a slowdown in household RMI spend."M'‹r Coffey said Marshalls' market is stronger than replacement windows as there are no finance deals for driveways and patios."So people are only spending what they've already got," he said.The Construction Products Association’s recent Summer Forecast predicts growth in UK market volumes of 1.9 per cent in 2017, a slight improvement on '‹its Spring Forecast. "The group continues to outperform the CPA growth figures and the underlying short to medium term market indicators remain supportive'‹," said Mr Coffey'‹. '‹"'‹The CPA’s 2018 forecast has recently been reduced, which reflects the continuing wider economic uncertainty."H'‹e said the group has seen no impact from the economic uncertainty caused by the General Election and Brexit. As many of the firm's customers are retired, they are less likely to feel the pinch from slowing wage growth.Marshalls'‹ said its'‹ innovative product range and strong market positions will support '‹future '‹growth'‹.'‹The group has raised its interim dividend by 17 per cent to 3.4p per share and said it continues to look for acquisitions."'‹We've identified some acquisition targets," said Mr Coffey.'‹"Water management is a priority and also security products."The group has developed a range of kerbside products that could prevent terrorist attacks."We do a range of kerbs that would make it impossible for a vehicle to mount a pavement," said Mr Coffey.Sales to the public sector and commercial market, which represent 60 per cent of group sales, rose 3 per cent. Marshalls is targeting areas where higher levels of growth are anticipated, including new build housing, water management and rail.Sales in the international business rose 25 per cent and now represent 6 per cent of group sales. Revenue increased in all its main international markets, with the new sales office in Dubai having a positive impact on sales and order generation in the Middle East.

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