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Investing.com -- Marshalls (LON:MSLH) shares plunged over 22% on Friday after the company cut its full-year profit forecast, citing a downturn in key markets and weaker pricing in its Landscaping business, despite a 4% increase in first-half revenue.
The UK-based manufacturer reported revenue of £319 million for the six months ended June 30, up from £307 million a year earlier.
Growth was supported by higher volumes, but this was partially offset by a weaker product mix and pricing.
The company warned that market conditions softened at the end of May and are not expected to recover in the second half.
Adjusted profit before tax for 2025 is now expected to fall between £42 million and £46 million, down from previous consensus estimates of £55.4 million, according to analysts at RBC Capital Markets.
The new guidance reflects a 21% downgrade at the midpoint. “Capacity and cost cuts are now being implemented, on top of the ongoing Landscape Products improvement plan,” the analysts wrote in a note.
“Landscaping Products appears to be the core issue with continued downward pressure on prices and a weak product mix,” RBC added.
Revenue in Landscaping Products declined 1% year-on-year, an improvement from the 11% drop reported in the same period last year.
The company attributed the relative stabilization to stronger customer engagement and regained market share.
Still, structural overcapacity, increased value engineering in construction projects, and a shift toward lower-margin offerings continued to weigh on pricing and profitability.
Marshalls said these pressures, along with underuse of its manufacturing sites and targeted price investments, led to weaker-than-expected earnings in the first half. It does not expect conditions in Landscaping to improve before year-end.
In response, the company announced a partial site closure in the first half of the year, projected to deliver annualised savings of £3 million.
Additional cost-cutting measures in the second half are aimed at achieving total annualised savings of £9 million.
Other divisions performed more strongly. Building Products revenue rose 5% to £86 million, led by gains in Water Management and improvements in residential construction activity.
Roofing Products grew 11% to £98 million, driven by approximately 50% growth in Viridian Solar.
Marley Roofing also saw modest gains, increasing its market share in clay plain tiles and timber battens and maintaining share in concrete tiles.
Net debt before IFRS 16 rose to £173 million, up from £156 million at the end of June 2024 and £134 million in December 2024.
Marshalls said the increase reflected seasonal working capital needs and a £6.6 million contingent consideration payment. The company reported £145 million of undrawn committed facilities at the end of the period.