HIGHER demand coming on top of benefits from reorganisation carried
out during the recession has done wonders for Marley, the roofing tiles,
plastic pipes and car trim manufacturer.
''In 1994 the group made further significant progress,'' said chairman
Sir George Russell. ''Marley's strong competitive position and low
cost-base enabled the group to take advantage of the better trading
conditions that developed in our main markets.''
Underlying profits soared 61% to #47.8m for 1994, though this still
leaves them short of the peak seen in 1989. That was when Marley's
industry was dominated by boom and bust. Now chief executive David
Trapnell is hopeful the future will be less volatile, allowing the group
to show steadier growth.
This has certainly been the case in recent years for the plastics
business, which is the dominant activity. Its operating profits rose 7%
to #38.1m, while recovery in concrete and clay products provided the
profits powerhouse with a jump from #5m to #16.1m.
Margins in plastics were affected by a 40% surge in PVC prices as
prices could not quite keep track. These prices now look steadier.
Demand from housebuilders is mixed but Marley is aiming to introduce new
products and enter new markets.
It has acquired a plant in Hungary and set up sales operations in
Poland and the Czech Republic, which will be serviced from Hungary,
Germany and the UK.
In the Far East it has established itself in Malaysia and is hoping to
expand sales in the region, which was previously served by exports from
New Zealand.
South Africa is trading well after a slowdown before the election and
this is set to continue. The repair and maintenance market is strong and
increased Government spending on new housing will provide a further
boost.
Efficiency of the tiles and block business has been helped by
rationalisation, with 10 companies condensed into four and a couple of
plants closed. Higher demand enabled the remaining plants to run at
nearly full capacity, so benefiting margins.
Production rates can still be tweaked higher if demand continues to
improve, though 1995 is likely to be flatter.
Last year the tile market was up 9% and the block 18% while in America
the heavy building materials market was 4% higher, though Marley saw a
12% volume gain.
Gearing is down to 31% and Marley is on the lookout for acquisitions
within its core areas.
After a 24% increase to 2.6p in the final dividend, the total is up
from 4.2p to 4.7p.
Marley shares gained 6p to 136p and are a firm hold on a 4.3% yeild
and selling at 12 times earnings, which are likely to rise again this
year.
* HOLDERS of more than 53% of shares in the BES assured tenancy
company, Norcity Homes, have accepted the conversion offer from the
Norcity Residential Unit Trust in the first twelve business days since
it was launched.
Ross Macdonald of Neill Clerk Capital has written to shareholders
pointing out that remaining acceptances should be received by March 28.
Neill Clerk is behind the contested bid for another Glasgow-based BES
vehicle, Westscot Homes.
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