Marshalls PLC says 'outlook uncertain' as orders decline

Marshalls, who provide landscaping materials for the UK domestic market has said in a statement released the the London Stock Exchange that the outlook for 2009 looks uncertain after reporting fifteen percent full year decline in domestic landscaping.

Group revenues fell six per cent at £378 million (£403 million in 2007). Borrowings increased, via 'organic growth capital expenditure', to £112 million (£97 million in 2007) with closures of concrete manufacturing plants inCannock in the West Midlands and Sawley in the East Midlands, adding £12 million to costs - although Marshalls say that £5 million has been clawed back through the release of stock.

What I find worrying is Marshalls seem to be reacting to market conditions 'after' the event and its decision to reduce efforts in the domestic market in favour of the Public Sector and Commercial market and it expects to reduce the design, managed installations and Display Centres.

Public sector works is surely the last area set to be hit hard and my focus now, after weathering a good part of the current financial storm, would actually be in domestic landscaping.

Maybe, and excuse the pun, Marshalls are caught between a rock and a hard place because of the previous focus on an area of landscaping that will surely be effected for a considerable time.

Garden designers and landscapers will be shifting to a minimalist approach with an emphasis on softer garden features. Lawns, vegetable areas, children's play areas and simple soft seating and eating areas will be very much in demand.

My aim would be to retain the display areas and start designing small patios with integral eating and relaxing features and partner with outdoor furniture makers with a view to promoting living and steer emphasis away from gardens being a status symbol on a league table.

Read how Marshalls faired in last Novembers set of results.

Comments

[Nick]

Marshalls are sadly closing some of there paving centres. One being near to me at Bicester. One of the problems the public and paving firms like myself have with these centres is that there is no direct sales.

They have\had no onsite stocks because they do not sell direct to the public or contractors. you can only buy there products via a builders merchant or other authorised outlet.

So the paving centres were nothing more than glorified show rooms. The public may as well just get the brochure, then go to there local merchants to get what they want, and in doing so it cuts out the paving centre sales bod and saves them a few quid.

That why no bonified firm ever bothered with them, or any member of the public with a little knowledge of these centres.

That said it's still a sad day for Marshalls and the paving industry in general. They have a multitude of good products, and are big enough to be able to weather the storm, and will be with us for years to come.

[Philip Voice]

Thanks for your comment Nick. It just seems so unbelievable that these big firms are miscalculating the financial climate.

Marshalls, like other companies, continued to expand right up until the rug was pulled.

I cannot believe these highly paid executives didn't see this all coming?

[colin]

its interesting reading isnt it.
I am a soon to be ex technical consultant from Marshalls. we invested heavily in my region right up to December 2008 !
It seems that the PLC mentality has had a knee jerk reaction to the present financial times and not looked closely at the inividual areas for profitability. Smaller, densly populated areas with a realistic competetive strategy was needed when the business was starting to grow.
I agree that the whole system was top heavy form the start and far to departmental.The centres are far too expensive to run and not enough research was done on the pricing strategy. Anyway, Im looking for a new job now. Any ideas for the UK or abroad

[Philip Voice]

Hi Colin

Thanks for your comment and I am sorry that you are going to be losing your job.

I emailed Marshalls Group Marketing Director Chris Harrop and asked him if he would care to comment but thus far he has chosen not to respond.

I guess only history will tell us if their strategy has paid off?

Regards

Phil Voice

[Philip Voice]

Just as I suspected, Goldman Sachs says that the public sector is now set to suffer.

"We continue to believe that Marshalls is taking the right steps to address its cost base and focus on cash conservation," Goldman analysts say in a note.

"However, we expect the public and commercial market (about 60 percent of revenue) to experience a significant slowdown into 2009 and 2010, assuming a 6-12 month lag following the residential market slowdown."

http://www.iii.co.uk/investment/detail?code=cotn:MSLH.L&it=le

[Gerald Monk]

I completely sympathise with Colin, as I am close to someone who has suffered a similar fate. Seems they've been asleep at the wheel. Massive office recruitment in 2008, right up to the Autumn. Suddenly they realise they've got problems, and decide to have a 'cull' of office staff. Then, they've got rid of highly experienced and long serving staff, choosing to keep novices who know nothing of the Industry, and have only been there two minutes. There are also closures to two more factories, one near Wrexham and one near Chichester.
It looks to me as though the powers that be have totally lost the plot. Wonder if anyone might be considering making a bid? It needs something doing, as it's doomed under the current regime! Thank God I'm not a shareholder!