‘Value engineering’ on projects hits Marshalls’ profit

Building materials supplier Marshalls has warned its profits are being hit by what it says is increased value engineering on construction projects.

The listed firm issued a six-month trading update to the stock market today (Friday), flagging that it had reduced its adjusted pre-tax profit expectations for the year to 31 December to between £42m and £46m (it did not state what it previously expected its profit to be for 2025).

This is despite the six months to 30 June 2025 seeing revenue hit £319m, up from £307m in the equivalent period in 2024.

Adjusted pre-tax profit in 2024 stood at £52.2m, while in 2023 it was £53.3m.

Marshalls said its landscaping products were the most challenging element of its business this year, with “structural overcapacity in the UK supply chain continuing to exert downward pressure on prices”.

The company added that “cumulative inflation in building materials has driven increased value engineering in construction projects, shifting demand toward commodity products over higher-margin value-added solutions”.

It has partially closed its landscape products manufacturing facility, in order to save about £3m across the year. The update said unspecified other measures would help save a total of £9m.

Brick-sale revenues were also down, as the West Yorkshire-headquartered company said it chose to keep prices up to protect margins, rather than chase volume.

Its overall building products and roofing products divisions did see increased revenues, however, with the latter mainly due to its Viridian Solar photovoltaics-panel business.

Marshalls chief executive Matt Pullen said: “We have taken action to reduce costs and optimise our national manufacturing network in the first half of the year and are taking further action at pace in the second half, which together are expected to improve landscaping profitability materially in 2026.”

He said the company was “well positioned to respond swiftly to improving activity levels when our key end markets recover”.

Department for Business and Trade data, released earlier this month, showed brick deliveries across Britain were up by nearly a quarter in May compared with 12 months earlier, but remain far below levels seen in the years before 2023.

There were 138 million deliveries of bricks during the month, compared with 120 million in May 2024.

Concrete block deliveries were down by 0.3 per cent in May compared with the same month last year.

Meanwhile, the Building Cost Information Service predicts tender costs will rise by around 15 per cent, build costs by 14 per cent and materials costs by 13 per cent by 2030.