Marshalls profit decreases 4% as it announces factory closure

Landscape products company Marshalls has announced a 4% decrease in profits for 2004 in what the firm described as challenging market conditions.

Profit before tax for the year ended 31 December 2004 fell to £48.4m from £50.4m in 2003. The company blamed the profit fall on higher interest costs caused by the financing of a return of £75m to shareholders.

Like for like sales increased by 1% with acquisitions adding a further 2.7%. Though overall sales decreased slightly which Marshalls blamed on excessive rainfall during 2004. Turnover was £362.3m and dividend per share increased by 8.2% to 11.9p.

After weak sales of drainage products in 2004 Marshalls has decided to close a manufacture facility in Halifax and transfer production to its remaining manufacturing sites. The company blamed lower infrastructure spending for the fall in sales. The one off cost of closing the factory will be £1.5m to £2m.

Sales in landscape products increased by 5%, and in clay products sales were up 6%. However Marshalls concluded that the clay products business had little prospect of improving on fifth position in the UK market and sold it to Hanson on 1 January 2005 for £65m.

Marshalls said £31m of exceptional profit had been generated by the sale and it would explore acquisition and investment opportunities in 2005. If no investment opportunities arose Marshall said it would consider returning more cash to shareholders.

The company said it expected the challenging market conditions to continue into 2005 and said that it had already taken action to cut overheads and production levels in the final quarter of 2004.

Chief executive Graham Holden said: “The exciting new products and services that are being launched, tight control of costs and continued improvements in our manufacturing techniques and service performance allow us to face the future with confidence.”