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13 May 2009 07:00
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Interim Management Statement: 13Β May 2009
Current trading in line with management expectations.
Continuing emphasis on cash management, cost reduction, innovation and sales opportunities.
RaisingΒ Β£34Β million (net of expenses)Β of newΒ equity by way of a Rights Issue.
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Trading Performance Marshalls' revenueΒ for theΒ four months endedΒ 30 April 2009Β wasΒ in line withΒ managementΒ expectationsΒ at Β£103 millionΒ (2008: Β£135Β million)Β from two less working days. UnderlyingΒ daily salesΒ revenueΒ on a like for like basis, after adjustingΒ for differences in the winter stocking arrangementsΒ by distributors, was downΒ 19Β per cent against a strong comparative period in 2008. Current Priorities As soon as the difficult economic conditions became apparentΒ MarshallsΒ took immediate steps toΒ right-size its operations and cost base to withstand the economic downturn whilstΒ seeking to ensureΒ thatΒ it retainsΒ sufficientΒ capacity andΒ flexibilityΒ to respondΒ quicklyΒ toΒ theΒ upturnΒ when it comes. The decisive action takenΒ in 2008 and 2009 hasΒ includedΒ a reduction in operating capacity, a reduction in the cost base and cash conservation measures. TheΒ permanentΒ closure of four manufacturing sitesΒ has reducedΒ capacity by around 21 per cent. The remaining manufacturing plants are well invested, efficient and have the benefit of the Group's recent investmentΒ in robotics and automation. These plants areΒ operating at highΒ utilisation levels enabling efficiency gains to be realised andΒ theyΒ are also able to increase capacity once markets recover without substantial investment requirements. These plants also provideΒ effective national geographic coverage providing the Group with a real competitive advantage. The Group has reduced its cost base. Reductions in operating sitesΒ haveΒ savedΒ fixed costs and in addition the Group has closedΒ its Managed Installations businessΒ saving further fixed costs, ceased commissioning of ready to use mortar sites, consolidated Street Furniture and Stone Walling manufacturing and administration and reduced overheads in most functional areas. The Group has taken decisive action to conserve cash resources. The closure ofΒ the operating sites has enabled cash to be released from inventoriesΒ which areΒ reducing in line with expectations. Capital expenditure plans have been curtailed following a period of significant investment in the business. Lower taxation and pension payments will conserve cash in the short term. Balance Sheet and Cash Flow Marshalls'Β balance sheetΒ reflects the strong management actions taken over recent years and the business isΒ well invested. The Group's borrowings show their normal seasonal increase and amount to Β£135Β million atΒ 30 April 2009Β which isΒ benefiting from the effectiveΒ implementation of the decisionsΒ taken to conserve cash. The normal working capital profileΒ is expected to show a reduction inΒ the borrowings throughout the remainder of the calendar year. Marshalls' has today launched a fully underwritten rights issue to raise Β£34.2Β million (net of expenses). Further details of the rights issue are set out in the accompanying announcement and in the prospectus sent to shareholders. These documents can be found on the Company's websiteΒ www.marshalls.co.uk. The proposed rights issue will provide a more conservative capital structure for the medium term, provide increased headroom on financial covenants ensuring the retention of the full benefit of existing bank facilities and provideΒ theΒ flexibility to take advantage of opportunities to develop the Group's medium term strategy.Β Group Developments Our sponsorship of the RHS Chelsea Flower Show is in its third year. This is part of our strategy to continue to build awareness of the Marshalls'Β brand in both the Domestic market by creating "pull through demand" for our Marshalls Register of Installers and Builders Merchant customers and in the Public SectorΒ andΒ CommercialΒ markets by reinforcing our position as Landscape product specialists. This year at the RHS Chelsea Flower Show we will be creating the "Marshalls Living Street." The garden features a glimpse into the life of an urban street where the design and the community have embraced the theme of creating 'better landscapes' for towns, cities, public spaces and private gardens.Β Outlook The Public Sector and Commercial market, which representedΒ 59Β per cent of Group revenueΒ in 2008, is more subdued following a period ofΒ robustΒ activityΒ andΒ theΒ lead indicatorsΒ predict aΒ decline during the first half of 2009 before levelling out during the second half of the year. InΒ contrast the Domestic market hasΒ recentlyΒ performed more strongly than our expectations withΒ encouragingΒ tradingΒ during the important Easter period. Our surveyΒ ofΒ installer order books at the endΒ of April 2009Β wereΒ 7.1Β weeksΒ (2008: 8.2 weeks)Β up fromΒ 5.6Β weeksΒ at the end of February 2009. WeΒ maintain a strong emphasis and priority on cash management and cost reduction. We believe that our market leading position, the strength of our brand, our efficient manufacturing and sourcing, our national distribution network andΒ theΒ decisive actionsΒ taken will maximise our short term performance in an uncertain market without prejudicing our longer term prospects.Β |
Enquiries:
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Graham Holden |
Chief Executive |
Marshalls plc |
01484 438900 |
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Ian Burrell |
Finance Director Β |
Marshalls plc |
01484 438900 |
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Jon Coles |
Β |
Brunswick Group |
0207 404 5959 |
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Kate Miller |
Β |
Brunswick Group |
0207 404 5959 |
13Β May 2009
Note to the Editor:
AboutΒ Marshalls:
Established in the late 1880s,Β MarshallsΒ is theΒ UK's leading manufacturer of superior natural stone and innovative concrete hard landscaping products, supplying the construction, home improvement and landscape markets. MarshallsΒ provides the product ranges, design services, technical expertise, innovative ideas and inspiration to transform gardens, drives and public and commercial landscapes.
The Group operates its own quarries and manufacturing sites throughout theΒ UK, includingΒ a network ofΒ regional service centres and 2 National manufacturing and distribution sites. As a major plc,Β MarshallsΒ is committed to quality in everything it does, including environmental and ethical best practice and continual improvement in health and safety performance.
Forward-Looking Statements:
Any statements in this release, to the extent that they are forward-looking, are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. More information about the factors that may affect the Group's performance is contained in the Annual Report to shareholders forΒ the year endedΒ 31 December 2008.
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