Olympic Games proving to be paved with gold for Marshalls

ORDERS linked to the London Olympics are helping upmarket paving company Marshalls to hit its financial targets.

When the athletes and spectators arrive at the Olympic arenas in 2012, they will probably be walking on paving supplied by Marshalls.

Graham Holden, the company's chief executive, said there had been more requests for quotations associated with the Olympics, which would gather momentum this year.

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Marshalls will supply the paving on the concourses around the major Olympic venues.

The Huddersfield-based building materials and landscaping firm yesterday said it expected full-year trading results to be in line with market estimates.

However, the company remained cautious about its short-term outlook.

Marshalls makes and supplies paving and street furniture to councils, businesses and homeowners across the UK.

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Marshalls' revenue during 2009 was 312m, down from 378m in 2008.

On a like-for-like basis, the underlying daily sales revenue for the full year was down 16 per cent.

The second half stabilised with a reduction of 11 per cent on a like for like basis.

Sales to the public sector and commercial market, which represent around 58 per cent of Marshalls; sales, were down 18 per cent for the full year.

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Sales to the domestic market fell by 13 per cent when compared with 2008.

The company added: "Cash management has been a priority during 2009 and reductions in stock and capital expenditure have ensured that net debt at December 31 2009 is slightly better than plan at approximately 69m."

Marshalls said it continued to invest selectively in innovation to reduce operating costs and "extend its competitive advantage through new product development and service solutions".

The company added: "Investment has recently been made in polishing technology which will enable the group to develop new products for both existing and new markets."

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Marshalls highlighted that the latest industry forecasts for 2010 continued to predict mid single digit reductions in volume.

The trading statement added: "As far as the public sector and commercial market is concerned the order flow remains subdued, although in this market house building is showing signs of recovery from a low base, and there is increased order activity from the Olympics.

"No significant capital expenditure is necessary in the medium term, although the group continues to innovate and invest selectively to ensure that it continues to be well placed for when markets improve."

Founded in the late 1880s, Marshalls is one of the UK's biggest manufacturers of natural stone and concrete hard landscaping products.

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It supplies the construction, home improvement and landscape markets.

The company operates its own quarries and manufacturing sites across the UK, including a network of regional service centres and two national manufacturing and distribution sites.

The recession has forced the group to take tough action on costs over the last 18 months.

It has reduced capacity by a third, closing four factories, reducing stock levels and cutting more than 400 jobs. In 2009, it also raised 34m after expenses in a rights issue.

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The group has sponsored the Chelsea Flower Show for the last three years.

Recently, Marshalls has funded the work of Hadoti, an organisation that is helping to improve the lives of poor migrant workers in remote rural areas of India.

Hadoti helps migrant workers to implement development programmes in the mining region of Rajasthan.

These projects make life easier for vulnerable families working in the quarries around Bhundi and Kota.

'The best in class'

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Analysts at Numis Securities gave a bullish assessment of Marshalls' full year trading update.

They said: "In our view Marshalls remains best in class with an efficient geographic footprint, well invested plant and strong management and we maintain our buy rating.

"Net debt has marginally beaten our forecasts, coming in at 69m versus our forecast of 71m and we expect the group to remain cashflow focused in the year ahead.

"Marshalls also has the flexibility to cut costs further if required by implementing its 'lay off' plan, which reduces the cost base but

ensures the gr-oup's footprint is unchanged."

The analysts noted that the company is paying a 6 per cent yield and has a solid and well invested asset base.

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