Building products supplier Marshalls is axing around another 250 jobs and closing a factory in Scotland after sales dived due to a housing market slowdown.
The group said the cuts come as part of plans to save £9 million a year, which will see it shut a factory in Carluke in South Lanarkshire, while also reducing shifts and production at other sites and restructuring its commercial team.
The role reductions add to about 150 job losses at the end of last year.
Marshalls – headquartered in Elland, West Yorkshire – announced the latest jobs cull as it warned over full-year profits, with a result in the final six months set to be “markedly” lower than the first half and dashing hopes of a recovery.
The alert sent shares in Marshalls tumbling by as much as 10% in Monday morning trading.
Marshalls said like-for-like sales slumped by 13% in the six months to June 30, while it expects to report a 27% slump in interim underlying pre-tax profits, to around £33 million.
It said it has faced “persistent weakness in new build housing and private housing RMI (repair maintenance and improvement), which are key end markets for the group”.
“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,” Marshalls said.
It said it is taking “decisive action in responding to the challenging trading conditions”, which has “regrettably” led to the role cuts and factory closure.
Activity in Britain’s housebuilding sector has slowed down rapidly, with developers cutting home completions, as buyer demand has fallen due to soaring mortgage rates and worries over the economic outlook.
This has impacted Marshalls’ landscape products arm in particular due to its exposure to new build housing and domestic refurbishment work, with half-year revenues in the division slumping by a fifth to £174 million.
Marshalls said: “Whilst previously anticipating a recovery in market conditions in the second half of the year, the board is now of the view that an improvement in the second half performance is unlikely given the macro-economic backdrop.
“In addition, the board has chosen to reduce production volumes with a negative impact on operational efficiency in order to manage working capital.
“Taking these factors together, and in the absence of a recovery in demand in the group’s end markets, the board believes that the result in the second half will be markedly weaker than the first half, and consequently expects to deliver a result for the full year that is lower than its previous expectations.”
Press Association – by Holly Williams