(Sharecast News) – Landscaping supplier Marshalls reported a 2% improvement in first-half revenue on Wednesday, thanks to a four-month contribution from Marley, with like-for-like revenue dipping 13%.
The FTSE 250 company reported a 26% tumble in adjusted profit before tax to £33.2m, and statutory profit before tax fell to £16.7m from £20.7m year-on-year.
Marshalls said it had revamped its group strategy amid a tough market, which was now gradually coming into force across the organisation.
In a bid to enhance efficiency, it said it had restructured its manufacturing capacity and associated costs – a move projected to yield yearly savings of around £9m.
The firm managed to cut down its net debt by £23.6m since June last year, bringing it to £184.6m on a pre-IFRS 16 basis on 30 June.
To bolster its medium-term funding security, Marshalls extended its syndicated bank facility by 12 months during the period, pushing the deadline to April 2027.
It also strategically pulled out of its Belgian operations, a move which the board said would allow the company to better concentrate its efforts on the UK construction market.
Looking ahead, Marshalls said it was bracing for the continuation of a strenuous trading milieu throughout the latter half of the year, with expectations for it to persist into 2024.
The board said it remained committed to prudent fiscal management, focusing on cost containment, enhancing adaptability, and ensuring effective cash flow control.
Its primary aim was to fortify the business’s resilience so that it was poised to bounce back as market conditions started showing signs of recovery.
Amid the prevailing challenges, the board said it remained optimistic that their proactive steps, combined with long-term growth levers and a commitment to strategic implementations, would substantially uplift profitability once the market regained its momentum.
“Market conditions in new house building and private housing RMI were challenging in the first half of the year, which led to a material reduction in volumes across all three of our reporting segments,” said chief executive officer Martyn Coffey.
“This resulted in a significant decline in group profitability compared to the first half of 2022.
“We have responded by taking action to improve our agility, reduce capacity, take costs out of the business, and manage cash.”
Coffey said the actions “regrettably” necessitated a reduction of around 250 roles across the organisation.
“However, we have been careful to ensure that we have sufficient latent manufacturing capacity that will allow us to respond quickly when there is an improvement in market conditions.
“Our refreshed strategy is underpinned by our strong market positions, established brands and focused investment plans to drive ongoing operational improvement.
“Notwithstanding short-term challenges, the board remains confident that the long-term market growth drivers and a focus on executing key strategic initiatives, will underpin a material improvement in profitability when market conditions normalise.”
Reporting by Josh White for Sharecast.com.