Marshalls sees slowdown but sales continue to grow

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LANDSCAPE products group Marshalls said sales continue to increase amid tough markets, although growth has slowed in recent months as uncertainty weighs on consumers.

The Huddersfield-based group, which makes and supplies products ranging from concrete paving to security bollards and signs, said sales from continuing operations for the 10 months to the end of October increased seven per cent to £298m, compared with £278m a year earlier.

However, this was down on the nine per cent sales increase seen in the first six months of the year when numbers were flattered by poor weather a year earlier.

In August the group warned second half sales growth would moderate because comparative numbers got tougher and the domestic outlook was “softening”.

Yesterday it said: “After a positive start to the year, the UK domestic end market remains more subdued and market volumes are expected to be lower in the second half of the year against strong comparatives.”

The company went on: “This weakness will be offset by sales into overseas domestic end markets.”

Sales to domestic customers, which make up 40 per cent of its turnover, were up six per cent year-on-year. This figure includes sales to domestic overseas markets, after it launched operations in northern Europe.

“People who typically buy a Marshalls driveway or pave their patios... are those who are older, have equity in their house, cash in the bank and the ability to do these projects,” said finance director Ian Burrell.

“The one thing that determines whether they do it is if they have the confidence. With the negative news in the media and concerns in Europe these things are going to knock confidence a bit. It’s that consumer confidence that’s holding it back.”

He added Marshalls was encouraged by domestic installer order books, which stood at 7.8 weeks at the end of October, down on 8.1 weeks in October 2010 but higher than seven weeks in June. “It’s not all doom and gloom,” he said.

To counter sliding UK domestic sales, Marshalls is growing its overseas operations. It bought two concrete block paving plants in Belgium out of administration earlier this year, and expects to spend £8m to £10m on its Northern Europe expansion this year.

The group hopes to cover Holland and Northern France – a population of 40m – from its new base. It plans to generate three per cent of sales overseas this year, up from one per cent a year ago, and is targeting five per cent in 2012 and 10 per cent in 2014.

It is selling specialist products, manufactured in Belgium and also some imported items.

“Recessions bring challenges but they also bring opportunities,” said Mr Burrell. “You’ve got to take them when they are there.

“It gives us real opportunities to organically grow from a small position. It gives us a base to be a credible player.”

The group’s sales to the public sector and commercial markets – some 60 per cent of its business –increased eight per cent on a like-for-like basis. Marshalls said “continuing strength” in commercial – such as supermarkets, rail and housebuilding – is helping to offset anticipated weakness in public sector work.

“What we are seeing is when (public sector) projects complete there are probably not as many new ones starting, but it’s a gradual reduction,” said Mr Burrell.

Marshalls is a major supplier to the 2012 Olympics, and hopes to achieve £9m to £10m of sales from various projects connected to the Games. Its workload for the Olympics is at its peak with about 40 of its lorries arriving daily at various sites.

In recent years, Marshalls has also been developing its “integrated offer” to cross-sell more of its products, such as a rail package including tactile paving, benches, signs and bollards. Its products have been used in refurbishments of stations including Birmingham New Street, Reading and Aberystwyth.