Marshalls on a steady path as profits take off

LANDSCAPE PRODUCTS firm Marshalls, which supplied the paving for the high profile redevelopment around St Paul's Cathedral, reported a big hike in half year profits and said it hasn't seen any Brexit fall out yet.

The Elland-based firm said medium and long term indicators remain supportive despite the heightened economic and political uncertainty since the EU referendum.

CEO Martyn Coffey said: “This increased uncertainty has not impacted underlying trading to date although we continue to monitor closely the wider business environment. The board is confident of achieving its expectations for 2016.

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“If you drew a line of sales and orders, you’d struggle to find when Brexit took place. We haven’t seen any change. We thought a danger would be cancellations, but we’ve seen none.”

He added that the group’s client base tends to be mature people who are investing in their property.

“Brexit hasn’t changed their confidence. The reality is if you are doing the same work and getting the same money as before the referendum, you carry on,” he said.

The group is gearing up for a big sales boost as Cross​rail, the new high frequency railway for London and the South East, hands out contracts.

“We’ve started getting orders already. We’ve had around £1m in orders and we are bidding for £5m. Over time we will bid for tens of millions on Crossrail,” said Mr Coffey.

The first orders are for platform paving and they will be followed by orders for concourse and outside station paving.

One of the group’s most high profile contracts is for the Bloomberg building in London, two office blocks that will be connected by a walkway paved with York Stone. Marshalls has also provided the sandstone cladding for the blocks.

Marshalls said pre-tax profits jumped 21 per cent to £25.1m in the six months to June 30 while revenue rose 2 per cent to £202.4m.

The group has raised its interim dividend by 29 per cent to 2.9p per share, reflecting strong cash generation and the board’s confidence in the future.

Marshalls reported a strong sales performance in May and June and the moving average monthly revenue trend shows that 2016 sales exceed previous years. He added that this has continued into July and August.

Sales to the public sector and commercial market, which makes up nearly two thirds of group sales, were broadly flat, but sales to the domestic market, which make up just under a third of sales, rose 7 per cent. Domestic revenue in May and June was particularly strong with growth up 12 per cent. The survey of domestic installers at the end of June revealed continuing strong order books.

Sales in the international business, which make up 5 per cent of group sales, fell 10.8 per cent in the six months to June 30. Mr Coffey said that despite the reduction in revenue, there was a reduced loss within the international business.

“Our international business is based in Belgium and the fall follows the issues they have had with terrorism. Brussels was in lock down for three weeks after the attack,” he said. The suicide bombings in March killed 32 civilians.

Marshalls said a new sales office in Dubai opened in January and this is having a positive impact on sales in the Middle East.

Following the upbeat results, analyst Clyde Lewis at Peel Hunt said: “To date, the group has seen no impact on its business from the referendum and it remains confident about meeting market profit expectations for 2016. The strong ongoing performance in cash flow gives the group more scope to spend or to pay another supplementary dividend.”