Marshalls (MSLH) Investor Update summary

Half-year financial performance and trading update

• Group revenue grew 4% year-on-year to £319.5m, with roofing and building products up 11% and 6% respectively, while landscaping revenue contracted by 1%, a marked improvement from the previous 11% decline.

• Operating profit fell 16% to £28.4m, mainly due to weaker landscaping performance, while building and roofing products saw profit growth.

• Adjusted earnings per share dropped 16% to 6.6p, and the interim dividend was reduced by 15% to 2.2p per share, maintaining a 2x cover policy.

• Net debt improved by £4m year-on-year to £152m, with strong operating cash flow conversion at 94% and disciplined working capital management.

• Capital expenditure remains tightly controlled, with a focus on organic growth, carbon leadership, and maintaining a robust balance sheet.

Landscaping products business and performance improvement plan

• Landscaping revenue trend improved, but margins were impacted by subdued markets, overcapacity, and a shift to lower-margin commodity products.

• A comprehensive performance improvement plan was accelerated, targeting £9m in annualized savings by 2026, with £3m expected in 2025.

• Actions include partial site closure, network optimization, portfolio simplification, and exiting or improving unprofitable product lines.

• Commercial initiatives and new trading agreements are regaining market share and improving product mix, with an 8% increase in value-add order intake between April and July.

• SKU reduction of 28% and enhanced customer engagement are positioning the business for a material profitability uplift in 2026.

Strategic progress and outlook

• The transform and growth strategy focuses on diversification, market-leading brands, and operational excellence, reducing reliance on any single business unit.

• Roofing and solar segments are benefiting from regulatory tailwinds, with Viridian Solar's market share at 40-45% and new standards expected to double its addressable market.

• Water management and mortars are driving growth in building products, with strong infrastructure project wins and enhanced design capabilities.

• Bricks business is focusing on low-carbon products and margin protection amid sector overcapacity and price competition.

• Medium-term targets include a 15% operating margin and return on capital employed, with growth driven by both market recovery and self-help initiatives.