Marshalls’ sales slide on wet summer

The Huddersfield-based group said 2012 revenues fell to £309m from £334m in 2011, as it was hurt by the summer’s heavy rainfall and the austere economic climate.

The group said its international business, which is targeting Northern Europe with niche products, is making “steady progress” and now account for about five per cent of group sales.

During the year sales to the public sector and commercial markets - roughly two thirds of its revenues - fell six per cent. Sales to domestic users fell 12 per cent.

Marshalls said “despite the challenging economic backdrop”, it continues to target growth markets in the public and commercial arenas, such as street furniture, water management, internal stone flooring, rail and retail.

It added consumer confidence remains “reasonably stable, albeit at a low level”. Domestic installer order books were 8.7 weeks at the end of October from 7.8 weeks a year earlier.

Marshalls said its “decisive and proactive” cost cuts, revealed in July, were completed ahead of schedule. This included closing its Maltby paving plant and a stone walling plant in Derbyshire.

“Marshalls has strong operational and financial flexibility,” it said. “Capacity and the cost base are at a sustainable level for current market volumes. The group is well placed to take advantage of any improvement in market conditions.”

Net debt fell to £64m at the year-end, from £77m a year earlier and Marshalls said cash “realisation” is ahead of plan. Analysts believe cost cuts and a tax credit will mean it can maintain its dividend.

Panmure Gordon analysts said: “The group has seen a better than expected debt performance in the period. A tax credit also means our EPS (earnings per share) forecast will rise and the group’s expected dividend payment will now be covered by earnings.”