Yorkshire-based stone and concrete specialists and FTSE 250 company Marshalls has rebounded from two years of Covid-driven disruption with pre-pandemic levels of revenues and profits.
The company has benefitted from a home improvements boom, with people increasingly looking to renovate indoor and outdoor spaces having spent so much time at home during the pandemic.
In its full-year results published yesterday, Marshalls reported revenues of almost £590m, a 25 per cent increase on 2020, and nearly £50m more than for 2019. Its operating profit was also 180 per cent up on 2020, despite inflationary and supply chain concerns, alongside escalating raw material costs.
Investors clearly were pleased with the results, with shares rising 4.74 per cent at close of play yesterday.
City A.M. spoke with Marshall’s chief executive Martyn Coffey about the state of the industry and Marshall’s resurgent business.
Q: What are the main things you have learned from the pandemic?
One of the lessons I think we’ve all learned through Covid-19 we’ve got to be more and more flexible.
We’ve had to respond to labour shortages, when the pandemic actually hit people in the factories and logistics. Sometimes we’ve had material shortages, and we have definitely had material inflation costs. The business has had to be very agile in terms of managing those things. We have had to make sure that resources are in right place and we are manufacturing the products.
We’ve had to put the process in place to make sure if there’s cost inflation, we’re giving our customers plenty of time to advise them of price increases.
Q: Do you think your rebound reflects the construction industry more widely?
If you take the market of construction, it bounced back very quickly. I think from Marshall’s point of view, we’re in a sweet spot at the moment because we’re exposed to new build housing, which is very strong. We’re also linked to infrastructure spend, which is very strong. We build for local authorities, which are spending money on rail and, obviously, in transport. Our domestic business has been incredibly strong since Covid-19.
I think people are spending more time at home deciding they want to invest in the home and particularly in outside space.
So, I think the markets that we’re in are very, very strong.
Q: Does Russia’s invasion of Ukraine and the threat of a recession concern you?
Ukraine is a terrible situation and it can obviously have effects on people, in terms of what it can do to energy costs.
The only thing I’d say is the exposure we probably have as a business would be to domestic customers. I think that domestic customers are split into different demographics.
So, the people who tend to be Marshall’s customers tend to be the older generation – householders – which have saved incredible sums of money in the last 18 months. At the moment, the demand for space outside is at levels we’ve never seen before. While it could have some effect, I’d be surprised if it affected the demand of what’s been installed at the moment, which is at unprecedented levels.
I think, from Marshalls point of view, we’re benefiting because older, more mature, wealthier people are seeming to want to spend money on their homes.
Q: So, no chance of an end to the home improvement boom?
I think we’re seeing a strong market with people obviously spending more time in their house. I think they also spend more time in the gardens and looking at space, with people enjoying hybrid working.
I think if I look at my business specifically, the peaks of patios and driveways was back in 2003-05,. So, there’s an awful lot of old patios and driveways to be upgraded.