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Investing.com -- Marshalls Plc (LON:MSLH) saw its stock decline by over 2% on Monday following its full-year financial results, which flagged an ongoing struggle in some key business segments despite growth in others.
The UK-based manufacturer company reported an 8% drop in revenue for 2024, driven primarily by a sharp downturn in its Landscaping Products division, which saw a 17% decline in revenue.
The results, published early Monday, reflected the impact of a continued slowdown in the UK housing and repair, maintenance, and improvement (RMI) sectors, both of which are critical to the company’s performance.
Marshalls’ Building Products and Roofing Products segments managed to offset some of the weakness, with Roofing Products showing a 4% increase in revenue, but the overall financial picture pointed to broader challenges within the construction market.
Despite cost-cutting efforts, including an £11 million reduction in overhead expenses and improvements in manufacturing efficiency, Marshalls’ adjusted operating profit slipped to £66.7 million, a 6% drop from the prior year.
The company also reported that its total dividend payout would decrease to 8.0 pence per share from 8.3 pence in the previous year, reflecting weaker profitability and a higher tax burden.
CEO Matt Pullen, in his first full-year report since taking the helm, emphasized the company’s resilience in difficult conditions and pointed to the long-term potential of its ‘Transform & Grow’ strategy, which aims to diversify revenue streams and improve efficiency.
RBC Capital Markets analysts noted that "Marshalls FY24 results were in line with the 21 January trading update."
The brokerage also pointed out that while Landscaping Products continued to struggle, the rate of contraction slowed in the second half of the year, and Roofing Products remained a strong performer with a "+70% yoy growth in Viridian Solar during H2 (Q4 +75% yoy growth)."
Despite the earnings decline, RBC maintained a "sector perform" rating on the stock, with a price target of 370p.
The investment bank also highlighted that "FY25 VA consensus sales £642m (+3.7% yoy); adj. PBT £56m (+8% yoy)," and the company still anticipates a market recovery later in the year.
Marshalls is banking on improvements in Landscaping Products and the continued strength of its Roofing and Building Products segments to drive a return to profit growth.