More on Marshalls
Marshalls
Building materials supplier Marshalls has reported flat results for the year to December 2004. Sales were up 3.7% compared to last year and operating profits were £53.5m, 0.8% above last year. Like for like sales increased by 1%, with acquisitions adding a further 2.7%. Overall sales were affected by wetter weather in 2004 which reduced the working time.
Marshalls produces concrete, clay and stone landscape, garden and patio products for both domestic and commercial use. The company’s customers are mainly large builders’ merchant groups, independent builders’ merchants, garden centres, contractors and local authorities.
The company seems to have enjoyed stronger sales in the second half of the year despite poorer conditions than last year - in the first half sales were up only 1.3%. Growth was strongest in the smaller departments. Clay products (which made up 9.4% of sales) experienced 5.7% growth while natural stone products (8.3% of sales) saw a 3.3% growth in sales. Landscape sales - which make up just over 80% of turnover - experienced 3.5% growth.
The company reports that underlying demand for products in the domestic, public sector and commercial markets was strong and the order book at the end of the year stood at 10.2 weeks (2003: 10).
The company also announced the sale of its clay products division which manufactures a range of clay bricks and paving stones. The business was sold for £65m or about 15.4× EBITDA which looks like a good price. The sale generated an exceptional profit of £31m.
The company has enjoyed another steady year of growth and while the company is exposed to the vagaries of the housing market its earnings are likely to be slightly less volatile due to a proportion of its sales arising from improvements/replacements to existing property. The company is focusing on product innovation and advertising to expand its markets. Trading at 311p the prospective PE of 12.3x is at the upper end of the sector range and roughly in line with Pilkington which has a far more diversified earnings base and a better yield. The prospective yield of 4.1% is reasonable against the sector.
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