Blackfriar: Big shoes to fill as paving boss walks path to retirement

Paving specialist Marshalls has done well to maintain its profit guidance for the full year despite the coldest March since 1910, which has played havoc with outdoor building work.

The snow earlier in the year won’t have helped matters either.

The Huddersfield-based group said underlying revenues fell six per cent during the 19 weeks to May 10 to £103m as a result of the terrible weather.

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However the good news is that order intake has recovered strongly since the middle of April to offset the shortfall.

While the Construction Products Association is forecasting a 2.1 per cent fall in UK market volumes in 2013, with most of it in the first quarter, the forecast is for growth of 1.9 per cent in 2014 and 3.9 per cent in 2015.

Such increases would be most welcome for Marshalls and chime with the first upgrade in Bank of England projections since the financial crisis began.

Yesterday the Bank’s governor Sir Mervyn King said a recovery from the worst slump since the 1930s Great Depression is finally in sight with GDP expected to increase to 0.5 per cent in the second quarter of the year.

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Marshalls’ outgoing chief executive Graham Holden said he is encouraged by a survey of domestic installers at the end of April, which showed order books of 8.5 weeks, up from 7.5 weeks in 2012 and up from 7.8 weeks at the end of February.

Like many innovative Yorkshire companies, Marshalls’ forays abroad are helping it to weather the declines at home.

Revenues in the international business rose seven per cent, while UK sales were down by around the same amount.

Marshalls’ focus on product innovation should stand it in good stead and the group is well placed to benefit as market conditions improve.

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Analyst Jon Bell at Shore Capital said: “Trading in the period has been challenging (against tough comparatives), with revenue from continuing operations down by six per cent, also impacted by cold weather in March which delayed the ‘normal’ seasonal upturn.

“That said, order intake has recovered strongly since mid April with a healthy order flow in many areas of the business.

“We believe that Marshalls is well-placed to benefit from any upturn in market conditions.”

Mr Holden will have presided over a momentous decade at the company by the time he retires next year.

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Mr Holden, 53, is credited with steering the firm through the worst economic downturn in living memory.

During his time at the top, he oversaw record profits during the years from 2004 to 2007.

But as he says himself: “The world changed in 2008.”

It has been a tough five-year period for Marshalls which fell into the red last year as wet weather and the weak economy forced a costly overhaul.

A £21.5m restructuring charge pushed the group to an £11.2m pre-tax loss.

Holden has had to undertake some unpleasant tasks.

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The firm cut its workforce by 15 per cent in 2012 meaning that Marshalls ended the year with 2,050 staff.

That’s down from about 2,800 in 2007 before the economic slump.

Analysts view Holden’s departure as a blow for the company, but said his decision to stay on for up to a year should ensure a smooth handover.

Mr Bell at Shore Capital, said: “Graham Holden has been an excellent CEO, particularly during a period of highly-challenging market conditions throughout which he has taken the necessary steps to promote and protect the company’s best interests.”

He will be a hard act to follow.

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It is generally assumed that the big supermarkets are to blame for the demise of smaller high street rivals.

The logic is that when one of the Big Four – Tesco, Sainsbury’s, Asda and Morrisons – open up a convenience store, the local butchers, bakers, fishmongers and greengrocers will suffer.

Justin King, Sainsbury’s chief executive, has thrown an interesting new slant on this debate.

He claims that more often than not, local traders will support a planning application from Sainsbury’s.

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“We create a centre of gravity. We are re-generating high streets. We attract 10,000 customers a week and other stores will get those people to sell to,” he said.

Interestingly Morrisons made a similar claim, saying that 40 per cent of visitors to Morrisons will then go on to visit another shop nearby.

It’s hard to make sense of this. Maybe one explanation is that thriving butchers, bakers, fishnmongers and greengrocers, will still attract their usual custom while also benefitting from the extra 10,000 customers a week.

Those that will suffer are the grocery chains that can’t beat the big four on price.

Why would anyone shop at a Spar, a Co-op, a Nisa or a Costcutter or any of the dozens of higher priced corner shops if they can buy it cheaper at one of the Big Four?