Marley cuts final to 2.1p: Operating profits slide to pounds 28.6m despite strong overseas activity

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The Independent Online
STRONG performances in Germany, the US and New Zealand were not enough to compensate for the British housing recession at Marley, the building products group, and pre-tax profits fell from pounds 25m to pounds 8.1m in the year to December.

The decline was partly because of a pounds 10.4m exceptional charge for rationalisation of its Thermalite concrete block factories, but operating profits were down 23 per cent to pounds 28.6m.

As warned at the halfway stage, the final dividend was cut from 4.25p to 2.1p making a reduced total of 4.2p (6.35p). George Russell, chairman, said: 'This is a new base for us to grow from, and we believe we have seen the bottom.' Earnings per share fell from 6p to 0.7p. The shares closed 2p lower at 108p.

Chris Beenham, finance director, said UK housing accounted for only a third of group business, but the downturn - which worsened as the year progressed - 'had a disproportionate impact' on the results.

Operating profits in the UK fell from pounds 10.3m to pounds 1.2m, on sales down 5.7 per cent at pounds 310.4m. The weakening of trading conditions over the year is reflected in the fact that a pounds 3.5m profit in the first half was turned into a pounds 2.3m loss in the second.

The recovery being experienced by housebuilders since the start of the year, however, has started feeding through into higher orders for its plumbing and drainage products and trenchblocks, which are used for the foundations of houses. 'I am confident that we are beginning to turn the corner in the UK,' said David Trapnell, managing director.

Operating profits in its overseas businesses rose from pounds 26.9m to pounds 28.6m as the US - where it is the largest manufacturer of bricks - more than doubled profits. That was not enough to compensate for the decline in UK building, however, and the concrete and clay products division turned from a pounds 4.1m profit to a pounds 5.3m loss.

The German businesses, which sell both to the car and building markets, also improved profits. Marley expects a downturn in the automotive and engineering business, but it says there is 'no sign of decline' in building products, where trading is being stimulated by increased housebuilding coupled with increased DIY demand.

Borrowings rose from pounds 91.7m to pounds 119.2m, or 57 per cent (41.3 per cent) of net assets, due to the impact of sterling's devaluation on overseas debts. Mr Beenham said the businesses were cash-generative and debt should reduce this year.

(Photograph omitted)