Marshalls builds momentum amid DIY boom

Reflecting the pandemic disruption to construction activity, landscaping products specialist Marshalls (MSLH) saw its revenue fall by 13 per cent in 2020 to £470m. Sales declined by a quarter in the first half of the year, but the lockdown-driven DIY boom saw fourth quarter revenue come in ahead of the same period in 2019.

For the year as a whole, adjusted operating profit dropped by almost two-thirds to £27m. The statutory figure came in lower, at £9m, weighed down by £18m of restructuring costs and asset impairments incurred in the first half. These restructuring efforts have reduced Marshall’s annual fixed cost base by £12m.

Excluding lease liabilities, net debt has ticked up by more than two-fifths to £27m, but the group says that this is “better than expected” after repaying all £9m of government furlough assistance and £11m of deferred VAT. It has also reinstated its dividend, declaring a final payout of 4.3p per share.

Marshalls has made a strong start to 2021 with revenue and orders to the end of February up 7 per cent and 12 per cent, respectively, versus a year earlier. While a full recovery of the construction industry will take time, the group is well-positioned to benefit from buoyant home improvement activity as well as long-term structural growth in housebuilding and public infrastructure projects. Buy.

Last IC View: Hold, 669p, 15 Sep 2020