Marshalls (MSLH), which supplies products ranging from street paving to home floor tiles, is delivering well on its five-year plan to boost its return on capital and operating margins. By producing more innovative products, which take less time to install, the landscape products specialist is able to charge double the margin of its legacy products. During the first half of the year, return on capital increased 470 basis points to 19.9 per cent, while operating margins were boosted to 12.8 per cent, from 11.1 per cent a year earlier.
However, sluggish investment in public infrastructure meant sales for its public sector and commercial business, which accounts for around two-thirds of group sales, were flat. Chief executive Martyn Coffey says sales have picked up since the end of June, particularly as Marshalls has begun work on its Crossrail contract. Sales to the domestic market were up 7 per cent as the Marshalls register of domestic installers increased 5 per cent to nearly 1,900 teams nationwide.
Tight cost control and improved cash flow helped push down net debt by about three-quarters to just £8.8m. Mr Coffey says the group's reduced debt position puts it in a much better position to weather cyclical risk.
Analysts at Peel Hunt expect adjusted pre-tax profits of £43m for the year to December 2016, giving EPS of 17.4p (from £35.3m and 14.1p in 2015).
MARSHALLS (MSLH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 316p | MARKET VALUE: | £623m | |
| TOUCH: | 315.9-316.2p | 12-MONTH HIGH: | 377p | LOW: 199p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 103p* | NET DEBT: | 4% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 199 | 20.8 | 8.5 | 2.25 |
| 2016 | 202 | 25.1 | 10.4 | 2.90 |
| % change | +2 | +21 | +22 | +29 |
Ex-div: 20 Oct Payment: 2 Dec *Includes intangible assets of £40.1m, or 20p a share | ||||
