Trading Update
H1 revenue £202m down 8% reported, 4% on LFL basis; UK Tiles capacity cut 50%.
vs expectations: in line
- Group revenue £202m (prior £219.9m)
- UK revenue growth (LFL) (1%)
- South Africa revenue decline (CC LFL) (11%)
- Underlying operating profit H1 no less than £21m (prior £22.0m)
- Net debt (pre-IFRS 16) approximately £48m (prior £49.9m at 31 March 2023)
- Net debt/EBITDA leverage approximately 1.0x
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Norcros plc, a market leading group providing design led, high quality bathroom and kitchen products, today releases its scheduled trading update ahead of announcing its Interim Results for the 26 weeks to 1 October 2023 on 16 November 2023.
Robust trading performance in line with expectations
The Group delivered a robust H1 performance despite the challenging demand environment, reflecting market share gains driven by successful new product launches, the strength of our customer proposition and the breadth of our distribution channels.
H1 revenue increase/(decrease)
| Reported | CC 1 | CC 1 LFL 2 | |
|---|---|---|---|
| UK | 1% | 1% | (1%) |
| South Africa | (25%) | (11%) | (11%) |
| Group | (8%) | (3%) | (4%) |
In our UK business, reported revenue for the first half was 1% higher than the previous year and on a LFL2 basis, just 1% lower with Triton and Merlyn performing particularly strongly. We continue to proactively manage our capital allocation and, in this regard, will be reducing manufacturing capacity at Johnson Tiles (UK) by approximately 50% in response to lower UK tile demand. Costs associated with this of circa £1.4m will be reported separately as an exceptional item.
In South Africa, notwithstanding national energy supply constraints impacting home market demand, our market leading business, brands, and experienced management team, continued to take market share, albeit revenue for the first half was 11% lower than the record prior year on a CC1 basis.
Group revenue for the 26 week period is approximately £202m (2022: £219.9m), 4% lower on a constant currency LFL2 basis and 8% lower on a reported basis than the record prior year comparator.
Our performance in the first half of this financial year continues to reflect the strength of our in-house product development capabilities, leading brands and excellent customer service proposition. We expect to report an underlying operating profit in the first half of the year of no less than £21m (2022: £22.0m).
Financial position
The balance sheet remains strong with net debt of approximately £48m on a pre-IFRS16 basis (net debt of £58.9m as at 30 September 2022 and £49.9m as at 31 March 2023). This represents leverage of approximately 1.0x net debt to EBITDA. The Group has committed banking facilities of £130m maturing October 2026.
Senior management appointment
We are pleased to announce the appointment from 2 January 2024 of Helene Roberts to the executive committee of the Norcros Group as Managing Director for the UK and Ireland. Helene succeeds Thomas Willcocks following his appointment as Chief Executive Officer in April 2023. Helene joins from Robinson plc, the European plastic and packaging manufacturer, where she was CEO for four years. Helene brings extensive leadership experience and a strong track record in sustainable product development and sourcing.
Outlook
The Board remains confident that our experienced management teams and consistent execution of strategy will continue to deliver market share gains for the year ending 31 March 2024 and expect full year operating profit to be in line with market expectations 3.
- CC refers to constant currency basis
- LFL (like for like) adjusted for Grant Westfield (acquired 31 May 2022) and Norcros Adhesives
- Norcros compiled market consensus for the year to 31 March 2024 is for an underlying operating profit of £43.4 million
Cleaned text: letterheads, contacts and legal notices removed. View the original announcement ↗ · Company filings. Not investment advice.