18th Mar 2024 12:30
(Alliance News) - Shareholders were disappointed with Marshalls PLC on Monday, after it reported a drop in revenue and said it expects recovery to be more slow than previously anticipated.
"Shares in building materials outfit Marshalls took another big hit as it downgraded guidance and slashed its dividend," said AJ Bell's Russ Mould.
"Significantly, the company has seen a downturn in both new build housing and repair, maintenance and improvement work and even its non-housing and infrastructure businesses have not been spared entirely."
Marshalls shares were down 8.9% to 265.00 pence each on Monday afternoon in London.
The Elland, England-based landscaping products maker said pretax profit dived 40% to GBP22.2 million in 2023 from GBP37.2 million in 2022, as revenue contracted 6.7% to GBP671.2 million from GBP719.4 million.
Marshalls noted a decline in real wages in the UK, unprecedented pressure on household budgets, and reduced demand in the housing sector, following interest rate increases by the Bank of England in 2023.
"The impacts have been exaggerated by economic uncertainties and weak consumer confidence, which also saw reduced investment in the non-housing and infrastructure sectors although these remained more resilient in 2023," it said.
The company cut its final dividend by 42% to 5.7 pence per share from 9.9p a year prior, reducing the total payout to 8.3p from 15.6p.
Marshalls said that revenue in the first two months of 2024 was lower than in 2023 and reflects the continued weakness seen in the second half of last year.
"In line with recent sentiment of UK economic and industry forecasts, the board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves. The start of this recovery is now expected to be slower and more modest than previously assumed," the company explained.
Therefore, Marshalls believes that revenue in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023.
Analysts at Davy said they will review their forecasts on the back of Monday's announcement.
They are currently forecasting an adjusted pretax profit of GBP60.5 million, slightly ahead of company-compiled consensus of GBP60.2 million.
Davy analysts added that based on Marshalls' outlook comments, an 11% reduction in 2024 pretax profit expectations is expected.
By Sophie Rose, Alliance News senior reporter
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