Marshalls sees way ahead paved with uncertainty

PAVING specialist Marshalls reported good order books for the remainder of the year although it warned of uncertainty following the Government's Spending Review.

The Huddersfield-based group said it is yet to be seen what impact the Spending Review will have and how it will affect consumer and business confidence, but it said it has the flexibility to respond to changing market conditions.

Chief executive Graham Holden said the group is well placed to benefit when demand does improve.

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"Selective investment in new products and new markets remains a key priority and we continue to build on the strong Marshalls brand and our market leading position," he added.

Headline revenue rose nearly five per cent to 290m during the 10 months to October 31.

Like-for-like sales rose five per cent with sales to the public sector and commercial market rising seven per cent.

Sales to the domestic market increased by three per cent, reflecting the reduction in consumer confidence.

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The group expects trading to be in line with expectations despite increased fuel costs and a slightly lower margin product mix.

Marshalls is battling through a tough period as consumer caution continues to dampen demand for big ticket items and public sector spending is squeezed.

Despite this pre-tax profits for the first six months of the year almost doubled from 4m a year ago to 7.5m. Sales edged up to 169.8m from 166m.

The group saw a turnaround in the domestic garden, DIY and landscape market after snow hit the first quarter, with a stronger second quarter and "healthy" forward order book.

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The freezing conditions at the start of the year cost the company about 2m in total.

The group predicts a further small increase in demand from the public sector and commercial market in late 2010 and early 2011, before public sector cuts begin to bite.

Following the Government's cutbacks, public sector demand is expected to weaken and it remains to be seen whether the commercial sector will pick up the slack.

The group said the private sector is showing signs of life, with previously mothballed commercial projects, such as Leeds' Trinity Quarter and Eastgate shopping developments, being restarted.