Marshalls Regulatory News (MSLH)

8 Jan 2010 07:00



Trading Update: 8 January 2010

Trading in line with expectations

Trading Performance

Marshalls' revenue for the year ended 31 December 2009 was £312 million (2008: £378 million) from  3 fewer working days compared with 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 approximately 58 per cent of Marshalls' sales, were down 18 per cent for the full year and sales to the Domestic market were down 13 per cent compared to the prior year.

For the year ended 31 December 2009 Marshalls expects to announce underlying trading results in line with current market expectations.

Current Priorities

The Group continues to focus on driving sales particularly in product areas where activity is more robust, reducing costs and improving efficiency whilst maintaining operational flexibility for the medium term.  If necessary the Group can reduce the cost base further by implementing the temporary "lay off" plan agreed in August 2009.

Cash management has been a priority during 2009 and reductions in stock and capital expenditure have ensured that net debt at 31 December 2009 is slightly better than plan at approximately £69 million following the Debenture Stock redemption referred to below.

The Group continues to invest selectively in innovation to reduce operating costs and further extend its competitive advantage through new product development and service solutions. Investment has recently been made in polishing technology which will enable the Group to develop new products for both existing and new markets.

Redemption of Debenture

On 10 December 2009, the Group's subsidiary, Marshalls Group plc, successfully completed the redemption of its £20 million 11 3/8 per cent Debenture Stock 1992/2014. The total redemption cost was £27.3 million (including costs) and the redemption premium of £7.3 million will be disclosed as an "exceptional" financing cost in the 2009 financial statements.  The redemption of the Debenture Stock prior to its maturity date will reduce the Group's interest costs in the short to medium term.

The Group has significant committed facilities in place with a positive spread of medium term maturities and has used these facilities to redeem the Debenture Stock.

Outlook

The Group remains cautious about the short term outlook, especially given the latest industry forecasts for 2010 which continue to predict mid single digit reductions in volume. In the Domestic market, installer order books at the end of October 2009 were an encouraging 8.1 weeks (2008: 6.4 weeks; 2007: 9.9 weeks) and there are signs that confidence is recovering albeit from a low base.  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.

Marshalls continues to balance short term performance with the need to maintain its strong market position, its reputation for operational excellence, its medium term manufacturing capability and its commitment to sustainability.  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.

Enquiries:

8 January 2010

Note to the Editor:

About Marshalls:

Established in the late 1880s, Marshalls is the UK's leading manufacturer of superior natural stone and innovative concrete hard landscaping products, supplying the construction, home improvement and landscape markets. Marshalls 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 the UK, including a network of regional service centres and 2 National manufacturing and distribution sites. As a major plc, Marshalls 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 for the year ended 31 December 2008.