The building products supplier Marshalls is cutting another 250 jobs and has issued a profits warning in the latest sign of the growing slump in the UK housebuilding market.
The group, based in Elland, West Yorkshire, will also close a factory in Scotland and reduce shifts and production elsewhere in an attempt to save £9m a year.
The latest job cuts comes after it said 150 roles would be axed at the end of last year, with the firm also aiming to restructure its commercial team. Marshalls said like-for-like sales slumped by 13% in the six months to 30 June, while it expects to report a 27% slump in interim underlying pre-tax profits, to about £33m.
It comes on the back of slowing demand for new-build homes, which prompted Marshalls to warn that its full-year profits would be “markedly” lower than those for the first half of the year.
The UK construction sector has been hit by a slump in demand from would-be homebuyers amid falling property prices and rising interest rates that have made it harder for potential customers to get a mortgage.
Earlier this month, Britain’s largest housebuilder, Barratt Developments, suffered a double-digit drop in annual profits after a significant slump in demand.
Projects have also been beset by soaring material costs and a shortage of skilled labour, caused in part by Brexit. Last month, the government responded by adding bricklayers, plasterers and other construction jobs to its “shortage occupation list”, making it easier for foreign builders to come to Britain to work.
Shares in Marshalls fell by as much as 10% in Monday morning trading after its profits warning but its board insisted it was “well-placed to deliver profitable long-term growth when market conditions improve”.
“The sustained high levels of inflation, increasing interest rates and weak consumer confidence means that the board anticipates the group’s performance in the second half will be below its previous expectations,” Marshalls said.
Its landscape products arm has been especially affected due to its exposure to new-build housing and domestic refurbishment work, with half-year revenues in the division slumping by a fifth to £174m.
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Marshalls said: “While previously anticipating a recovery in market conditions in the second half of the year, the board is now of the view that an improvement in the second-half performance is unlikely given the macroeconomic backdrop.”
Bank of England policymakers are forecast to raise the base rate from its current 5% level by a further 0.25 percentage points when they meet this Thursday, but in a more positive omen for the property market many mortgage providers began cutting their rates last week, suggesting the level of the average fixed deal may be close to peaking.
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