More on Marshalls
Marshalls: H1 2006 trading statement
Building supplies company Marshall’s said that revenues in the first half of 2006 were up 6.9% to £198m, mainly driven by acquisitions but also helped by a more robust demand from the public sector.
Revenue for the half year increased by £13m, of which £5m was due to acquisitions. On a like for like basis revenue from continuing operations was up 3.4%.
The company said Like for like sales to the Public Sector and Commercial market (50% of group revenue) were up 8% but in the Domestic market sales were flat. The company said flatter sales in the domestic market reflected the “widely experienced” slowdown in consumer spending on home improvements.
Some analysts have pointed out that reduced spending on home improvements reflects the dearth of first time buyers in the house market (the house market being dominated by more speculative buy-to-let investors) and may point to a dip in the housing market. This is in turn will affect suppliers such as Marshall’s.
Marshall’s seems hopeful that the market will improve and cited a survey of domestic installers’ average order books which rose to 9.5 weeks from 8.6 weeks at the beginning of the year and 8.9 weeks at a similar time last year.
Given the company’s steady level of acquisitions and the somewhat improved market, short-term prospects look reasonable although long term prospects, tied to the overall housing market are less certain.
The share trades at 318p, on a prospective PE (2007 earnings) of 15.4x, somewhat cheaper than when we last looked at it but still looking rather pricy given the subdued growth prospects. The yield is reasonable at 4.2%.
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