Shares in Marshalls (MSLH) jumped over 5 per cent after the landscape products specialist reported a near flawless first-half performance. The significant level of operational gearing within the business model was highlighted by an 11 per cent rise in sales giving a 48 per cent gain in pre-tax profits. And chief executive Martin Coffey stressed that the company is still operating below full capacity.
Other operational metrics were equally impressive, with return on capital employed up by a half at 15.2 per cent, while margins at the operating level grew from 8.7 per cent to 11.1 per cent. Net debt fell from £50.9m in June 2014 to £32.9m, and with the company pension scheme now in surplus Marshalls has stopped making contributions, saving it £4.6m a year.
Perhaps surprisingly, the key driver of revenue growth was the public sector and commercial business, which accounted for nearly two-thirds of total revenues. Sales here grew by 15 per cent, while the residential side of the business delivered a more modest 4 per cent increase. However, an increase in installer order books - which Marshall surveys - to a record 12 weeks suggests that retail demand is being held back by a lack of installer capacity. The company is addressing this by bringing more installers on board.
Analysts at Numis are forecasting full-year pre-tax profits of £34m and EPS of 13.8p (from £22.4m and 10.1p in 2014).
| MARSHALLS (MSLH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 334p | MARKET VALUE: | £ 665m | |
| TOUCH: | 333-334p | 12-MONTH HIGH: | 339p | LOW: 180p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 92p* | NET DEBT: | 18% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 180 | 14.0 | 6.1 | 2 |
| 2015 | 199 | 20.8 | 8.5 | 2.25 |
| % change | +11 | +48 | +39 | +13 |
Ex-div: 22 Oct Payment: 4 Dec *Includes intangible assets of £40m, or 20p a share | ||||
