THE DIY downturn has hit sales at paving specialist Marshalls, but the group is confident that commercial and public sector work will make up the shortfall. The Huddersfield-based company is involved in a number of high-profile commercial projects including Terminal 5 at Heathrow and the rebuilding of Wembley Stadium. It is also talking to contractors in charge of building the London Olympic Village ahead of the games in 2012.

Fears of a house market crash, worries about rising gas and electricity bills, higher taxes and unemployment worries have made people far more cautious.

According to the Construction Products Association (CPA), overall construction output fell by 1.3 per cent in 2005, the first year on year fall since 1994. Private housing repair, maintenance and improvement was the worst performing market with a 5 per cent decline.

The domestic market is expected to remain challenging in 2006 with the CPA forecasting a decline of 1.0 per cent in private housing repair, maintenance and improvement expenditure. The good news is that it is expected to rise by 3 per cent in 2007 as confidence returns.

"Macro trends suggest 2007 will be a lot better," said chief executive Graham Holden. "The market conditions will be right for an increase in spending."

In 2005 revenue rose by 9.4 per cent to £359.3m. The public sector and commercial markets produced a 3.7 per cent increase in like-for-like revenues, which helped to counteract a 1.3 per cent drop in consumer division sales.

In a note Bridgewell Securities said: "Overall this is a solid performance in light of conditions and whilst Marshalls describes the outlook for the year ahead as challenging, we will leave numbers unchanged and retain our 'overweight' recommendation."

"You would have needed a lot of patience as an investor in Marshalls over the past 18 months. The sluggish housing sector has held the shares back and the majority of the reward has been the above average dividend. However the debt and gearing levels have been vastly improved during the year."

A number of DIY companies have reported tough trading as the consumer downturn shows no sign of letting up in the immediate future. Earlier this week building materials group Travis Perkins reported flat 2005 profits and said trading would remain tough in the first half of 2006.

In Yorkshire Marshalls is working on the West Central and Clarence Dock projects in Leeds and the refurbishment of Albion and King Edward Streets in Halifax.

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