Shares of Marshalls plc, the Elland, West Yorkshire-based stone and landscaping firm, fell as much as 13% on Tuesday after it published a trading update for the four months to April 2023 saying its trading performance in the year to date “has been weaker than originally anticipated.”

The company cited a “deterioration in new build housing” as one of the causes.

Marshalls said group revenue for the four months was £227 million “which represents year-on-year growth of 12 per cent including the benefit of the acquisition of Marley.”

However, on a like-for-like basis, revenue contracted by 14% “reflecting the uncertain macro-economic climate, a reduction in new house building and continued weakness in private housing RMI (repair, maintenance, improvement)  activity.”

Marshalls said that in the first quarter of the year, National House Building Council new housing starts were 27% lower than 2022, which had an impact on the performance of all the group’s reporting segments.   

On “strategic developments” Marshalls said that following the reduction in its cost base and manufacturing capacity implemented in the second half of last year in Marshalls Landscape Products “further actions have been taken to remove around 70 indirect roles in the Marshalls businesses, which will result in annualised savings of around £3.5 million.”

In its outlook, Marshalls said: “The board remains confident that the group is well placed to deliver profitable long-term growth when market conditions improve and continues to focus on its key strategic initiatives. 

“In the near-term, the macro-economic climate is expected to remain challenging and the trading performance in the year to date has been weaker than originally anticipated. 

“The board’s expectations for 2023 were set with reference to the Construction Products Association’s (CPA) Winter forecast that was published in January 2023. 

“The CPA reduced its 2023 construction output forecast earlier this month. This was principally driven by a six-percentage point deterioration in new build housing to a year-on-year contraction of 17 per cent. 

“The CPA cited reduced demand in the wake of the mini budget, the consequential sharp rise in mortgage rates and the end of Help to Buy as contributing factors for the downgrade.

“Taking these factors together, the board now expects to deliver a result that is lower than its original expectations.”