Marshalls (MSLH) H2 2024 earnings summary

Executive summary

• 2024 marked a pivotal year of transformation, with a new strategy focused on balanced growth across landscaping, roofing, and building products.

• Delivered resilient performance despite an 8% revenue decline and 2% reduction in profit before tax, with Roofing and Building Products contributing 80% of profits.

• The group realigned to a business unit-led model, invested in leadership, and prioritized customer-centricity.

• Disciplined working capital management led to a £39m reduction in net debt and improved leverage to 1.5x EBITDA.

• Landscaping Products underperformed but improvement plan is underway, targeting margin recovery.

Financial highlights

• Group revenue declined 8% year-over-year to £619.2 million, mainly due to continued weakness in new housing and private housing RMI.

• Profit before tax fell 2% to £52.2 million, with EPS down 4% to 16p.

• Operating profit decreased 6% to £66.7 million, but group operating margin improved by 0.3pp to 10.8%.

• Net debt reduced by £39 million to £133.9 million, with leverage at 1.5x EBITDA.

• Adjusted operating cash flow conversion was strong at 106%.

• Dividend per share reduced by 4% to 8p, maintaining a 2x cover policy.

Outlook and guidance

• Market recovery is expected later in 2024 or 2025, strengthening into 2025, with landscaping returning to revenue growth in 2025 and significant profit growth from 2026.

• Operating margin targeted to reach at least 15% in the medium term.

• CapEx for 2025 expected at the lower end of £20–30 million range, with increased investment in working capital and targeted bolt-on acquisitions.

• Net debt expected to remain stable in 2025, with reductions resuming from 2026.

• Forward indicators across the group are encouraging, with confidence in delivering improved profitability.