Marshalls Regulatory News (MSLH)

3 Jul 2009 07:00



Trading update for the six months ended 30 June 2009

Continuing emphasis on cash management, cost reduction, innovation and sales opportunities.

Successful completion of £34 million (net of expenses) Rights Issue. 

Trading Performance

Marshalls' revenue for the six months ended 30 June 2009 was £166 million (2008: £211 million), from two less working days compared with the same period in 2008, and in line with the trends highlighted at the time of the Rights Issue in May 2009. Underlying daily sales revenue on a like for like basis was down 19 per cent against a comparatively strong first half year in 2008.

Current Priorities

Decisive action has been taken by management in the past twelve months in response to the economic downturn and conditions. The Group's cost base has been reduced significantly through a combination of capacity reductions achieved by permanent works closures and temporary shift reductions. The Group maintains considerable operational flexibility in manufacturing capability which will enable it to respond quickly once markets recover. The Group's remaining manufacturing plants are efficient and well invested and this operational flexibility can be achieved without further significant investment.

The Group remains focussed on cash conservation. Our stock reduction programme is currently ahead of plan and capital expenditure has been reduced in line with plan.

Balance Sheet and Cash Flow

Following the raising of £34 million (net of expenses) from the recent Rights Issue, and also the action taken by management to conserve cash, the Group's borrowings have fallen to £74 million at 30 June 2009 compared with £111 million at 31 December 2008. Group net debt is expected to reduce further in the second half of 2009 as the impact of management actions continues to take effect.

The Group renewed its bank facilities in August 2008 and has significant committed facilities in place with a positive spread of medium term maturities and with the majority of committed facilities not maturing until 2011 or later. The Rights Issue has created a more conservative capital structure for the medium term, providing greater financial flexibility.

Group Developments

The Group's strategy continues to be to build awareness of the Marshalls' brand, which in the Domestic market is achieved by creating "pull through demand" for both the growing Marshalls Register of Installers and the established Builders Merchant customers. Marshalls' sponsorship of the RHS Chelsea Flower Show has been an important part of building this awareness. Marshalls' brand was further enhanced at the recent show where the Group received a Silver-Gilt medal for its show garden, "The Marshalls Living Street". The garden featured a creative view of a modern urban housing development within the general theme of creating a better landscape for towns, cities, public spaces and private gardens.

In the Public Sector and Commercial market the Group's strategy continues to be to reinforce its position as a market leading landscape products specialist.

A further competitive advantage is derived from the Group's sustainability credentials which are increasingly an important factor in generating new orders, particularly in the Public Sector. The Group has recently won awards for its approach to sustainability in the prestigious Business in the Community Awards for Excellence in each of the Climate Change, Eco-efficiency and Supply Chain categories. The Group also received a "Highly Commended" Marketing Society Award for Excellence in Ethical Marketing.

Dividend

The 2008 final dividend of 1.45 pence per share is being paid today, 3 July 2009, to shareholders registered at the close of business on 5 June 2009. This final dividend will not be paid on the new ordinary shares issued under the recent Rights Issue.

Outlook

Sales demand remains uncertain with no clear pattern emerging. The Public Sector and Commercial market continues to be subdued although the lead indicators predict a levelling out during the second half of the year. The Domestic market has recently performed in line with our expectations with installer order books at the end of June 2009 holding firm at 7.1 weeks (June 2008: 8.2 weeks; April 2009: 7.1 weeks).

Marshalls has a leading position in its core markets, with a strong brand, an efficient manufacturing and sourcing infrastructure and an enviable national distribution network. Cash management, cost reduction and innovation remain the key priorities and, with the benefit of the recent Rights Issue, the objectives are to maximise short term performance, to emerge from the current economic downturn in a stronger position and to be able to take advantage of the growth opportunities that the Group's core strengths are expected to generate. 

  Enquiries:

3 July 2009

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.