Shares of Marshalls, the concrete-products company, tumbled on Monday as the company announced that its first-half adjusted pretax profit had slipped and that it expected its full-year performance to fall short of expectations.
At 0706 GMT, shares were down 27.6 pence, or 10%, at 248.6 pence.
Slower Revenue Growth and Declining Profits
Marshalls revealed that it anticipated reporting revenue of £354 million ($454.9 million), showing a slight increase from the £348 million recorded the previous year. However, on a like-for-like basis, revenue contracted by 13%.
Adjusted pretax profit, on the other hand, is expected to be around £33 million, down from last year's figure of £45 million.
Challenging Economic Environment Impacts Performance
The company attributed the disappointing results to challenging market conditions, particularly in its key end markets of new build housing and private housing repair, maintenance, and improvement. Persistent weakness in these sectors, coupled with high levels of inflation, increasing interest rates, and weak consumer confidence have all taken a toll on Marshalls' performance.
"The sustained high levels of inflation, increasing interest rates and weak consumer confidence means that the board anticipates the group's performance in the second half will be below its previous expectations," the company stated.
Recovery Unlikely in Second Half
Although Marshalls had previously anticipated a recovery in the second half, it now believes that this is unlikely given the current macroeconomic backdrop. As a result, the company expects its full-year performance to be below its initial forecasts. However, no specific figures were provided.
Cost-Saving Initiatives Introduced
To mitigate the impact of the challenging market conditions, Marshalls' management has implemented several cost-saving initiatives. These initiatives include headcount reductions and are expected to result in annualized savings of around £9 million.
Despite the current difficulties, Marshalls remains confident in its ability to deliver long-term growth once conditions improve.
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