Delivering our strategic growth objectives
The new 5 year Strategy, launched in June 2019, maintains the objective of delivering sustainable growth. The main elements are:
- Continued focus on organic growth and investment - capital expenditure of £20 million planned for 2020 to drive growth
- Increasing momentum in the delivery of the digital strategy through continued investment and continuous improvement
- Increase in research and development and new product development to drive sales growth
- Renewed focus on increasing the profitability of the Emerging UK Businesses
- Continuing to target selective bolt-on acquisition opportunities in New Build Housing, Water Management and Minerals
- Continued focus on customer service, brand, operational and manufacturing excellence and procurement efficiency
- Maintaining a strong balance sheet, a flexible capital structure and a clear capital allocation policy
- Maintaining a 2 times earnings cover dividend policy, enhanced by supplementary dividends
Our vision
Our vision is to create better spaces and futures for everyone; socially, environmentally and economically.
Our mission
Our continuing mission is to deliver sustainable growth through a brand that drives customer specification of innovative product solutions for the built environment.
Strategic Priorities
- Brand preference for product specification
- Digital transformation
- New product development
- Logistics excellence
- Sustainable materials supply
- Customer centricity
- Operational excellence
- Growth in the emerging businesses
Developing strategy
Our 2020 strategy has been consistently followed during the last 3 years and has delivered strong growth. The Group is now well advanced in mapping out its ambitions for the next 5 years, setting strategic objectives that continue to support long-term sustainable growth. The Group’s strategic planning process incorporates engagement with stakeholders and a Board priority for 2019 includes the launch of the Group’s strategy for the next 5 years.
Shareholder value
To deliver sustainable shareholder value by improving the long-term operating performance of the business.
Our objectives
- To make strategic investments for organic growth and acquisitions.
- To strengthen the Marshalls brand by developing systems-based solutions.
- To have a progressive dividend policy supported by supplementary dividends, as appropriate.
What we have achieved
- Growth in EBITDA of 12 per cent to £90.1 million on a pre-IFRS 16 basis (£103.9 million on a reported basis).
- Market share gains.
- Dividend growth: 13 per cent.
- Supplementary dividend.
Future priorities
- To grow ROCE and EBITDA.
- To deliver long-term sustainable shareholder value.
- Digital transformation.
- To promote strong ethical, environmental and corporate social responsibility principles.
Key 5-year strategic priorities
- To grow ROCE and EBITDA and continue to deliver long-term sustainable shareholder value
- Digital transformation
Sustainable profitability
To maintain a strong market position and grow the business profitability in all the Group’s end markets.
Our objectives
- To outperform the market.
- To deliver new and innovative product solutions.
- To improve operational efficiency of our manufacturing and logistics network.
- To drive through sustainable cost reductions.
What we have achieved
- 12 per cent growth in operating profit (pre-IFRS 16 basis) driven by sustainable efficiency improvements.
- Increase in operating profit percentage to 13.4 per cent (2018: 13.2 per cent).
- Sales of new products in the core business now represent 13 per cent of total revenue.
- Continuing to exceed CPA growth forecasts.
Future priorities
- To focus on new product development to drive growth.
- Improve operational efficiency across the manufacturing network.
- Logistics excellence.
Key 5-year strategic priorities
- To deliver sustainable EPS growth
- New product development to drive growth
- Logistics excellence
Relationship building
To develop relationships with key stakeholders, customers and installers.
Our objectives
- Sustainable and ethical materials supply – to enable manufacturing flexibility.
- To focus on customer satisfaction.
- To promote integrated product solutions.
- To focus on installer training, marketing and sales support.
What we have achieved
- Dedicated “customer experience” team with strengthened relationships.
- 98 per cent customer service KPI.
- New Commercial and Domestic websites.
- 1,900 registered installer teams.
Future priorities
- To improve communication and stakeholder engagement.
- To focus on the customer.
- To invest in digital technology.
- Sustainable materials supply.
Key 5-year strategic priorities
- To continue to invest in digital and systems improvements to improve communication efficiency and stakeholder engagement
Organic expansion
To invest in organic expansion in existing and related markets and product categories to expand the business.
Our objectives
- To target growth areas such as New Build Housing, Road, Rail and Water Management.
- To invest in capital expenditure for organic growth.
- To increase sustainable profitability in the emerging businesses.
- To increase new product development.
What we have achieved
- Revenue growth of 10 per cent to £541.8 million.
- Significant growth in key focus areas whilst maintaining operational flexibility.
- Strong growth in New Build Housing revenue.
- Self help capital investment of £39.6 million over the last 4 years.
Future priorities
- To optimise our national network of manufacturing sites.
- To grow our emerging businesses and increase their market share.
- To develop our global supply chain.
Key 5-year strategic priorities
- To optimise our national network of manufacturing and distribution sites
- To further develop our global supply chains and infrastructure
Brand development
To strengthen and extend the Marshalls brand by focusing on innovation, service and new product development.
Our objectives
- To focus on The Marshalls Way.
- Customer satisfaction – to be the supplier of choice.
- To focus on innovation, customer service and product quality.
- To maintain the highest health and safety standards.
What we have achieved
- “Superbrand“ status.
- Continued development of Marshalls brand.
- Developed product range.
- Introduced 87 new product ranges to market in the current innovation cycle.
- Award accreditation, e.g. Health and Safety Award from the Mineral Products Association.
Future priorities
- To maintain the Group’s market leading position.
- Responsible business and The Marshalls Way.
- ESG principles and responsible business.
- To increase brand preference to drive product specification.
Key 5-year strategic priorities
- To maintain the Group’s market leading position and increase brand preference for product specification
- Brand preference that drives product specification
Effective capital structure and control framework
To maintain efficient and effective business controls and to ensure that the capital structure remains aligned with the Group’s corporate growth objectives.
Our objectives
- To maintain a flexible capital structure that recognises cyclical risk, focusing on security, efficiency and liquidity.
- To deliver a capital allocation strategy that is fully aligned with this capital structure.
What we have achieved
- Strong balance sheet with low gearing (20.3 per cent (6.3 per cent pre-IFRS 16)).
- Efficient portfolio of bank facilities with extended maturities and realigned headroom.
- Continued focus on working capital management and efficient inventory control.
Future priorities
- To maintain a flexible capital structure that recognises cyclical risk, focusing on security, efficiency and liquidity
- To deliver a capital allocation strategy that is fully aligned with this capital structure
Key 5-year strategic priorities
- To operate tight control over business operational and financial procedures
- To target a net debt to EBITDA ratio of between 0 and 1 times over the business cycle
