18th May 2016 12:02
LONDON (Alliance News) - Concrete block paving manufacturer Marshalls PLC saw its shares dip on Wednesday as revenue growth in the first four months of 2016 slowed amid project delays and some short-term uncertainty taking a toll on the market.
Shares in Marshalls sank on the subdued revenue growth, down 6.4% to 324.73 pence and the worst performer in the FTSE 250.
Marshalls makes a range of paving products used in retail stores and on streets, in addition to patio paving and benches for parks.
Marshalls said its UK revenue in the first four months to the end of April was GBP120.0 million, edging up from GBP119.0 million a year earlier, growth of around 0.8%. This is significantly slower than the 8.0% revenue growth Marshalls reported for 2015. Marshalls noted the growth in 2016 came against strong year-before comparatives and said it reflected softer conditions in commercial sales in March and April.
The company said it maintained its market share during the period, despite some project delays due to short-term uncertainty in the wider UK economy. Though Marshalls did not mention it specifically, much of the slowdown has been driven by uncertainty ahead of the UK's vote on its membership of the European Union, which has sapped confidence.
Still, the fundamentals of Marshalls' markets remain strong and the group said it remains confident on meeting its expectations for the year by maintaining margins even in the face of any softness in revenue growth.
Marshalls said the pipeline for major UK infrastructure projects remains strong but said around GBP4.0 million worth of sales due in the period had not been fulfilled due to caution amongst its clients on the wider economy.
Wet ground conditions earlier in 2016 also resulted in progress slowing on many construction sites for both its commercial and domestic operations. However, while Marshalls said local government landscape spending is subdued, this should eventually return.
Public Sector & Commercial division sales were broadly flat year-on-year in the first four months and Marshalls said it will continue to target areas of the market where higher growth is anticipated, including rail, new-build housing and water management.
Domestic sales were up 4.0% year-on-year, Marshalls said, and the group said the pipeline for UK infrastructure projects remains strong. It added, however, that the European market has continued to prove challenging.
Marshalls said it strategy to deliver organic growth through capital investment projects and operational efficiencies, outlined in its annual results in March, has progressed well and said it has made progress on identifying bolt-on acquisitions to complement this organic growth.
Chief Executive Martyn Coffey told Alliance News at the time of Marshalls' annual results that the group would target acquisitions in water management services and street furniture.
By Sam Unsted; [email protected]; @SamUAtAlliance
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