Victoria ends year in line with market expectations

Floor coverings company Victoria confirmed on Tuesday that current trading was consistent with its previous trading update of 18 February, and that the group's performance for the financial year ended 30 March was expected to meet consensus market expectations.

The AIM-traded firm said the strategy adopted in the last financial year to drive top line growth was continuing to deliver in the current calendar year, with like-for-like revenue gains across the group continuing to be 3%.

It said it remained confident that such growth was sustainable for the foreseeable future.

“Importantly, the various management actions to continue to grow operating margins, which were set out in some detail in the February market announcement, have been completed as scheduled and are having the positive impact expected,” the Victoria board said in its statement.

“As a consequence, it is expected that the group's margin increase of over 100 basis points in the 2019 financial year will be compounded by a further circa 100 basis points increase in the 2020 financial year.”

Management said it expected to generate “substantial” positive cash flow in the 2020 financial year.

The group had historically consistently converted between 85% and 95% of operating profits into cash before tax.

Last year, with a focus on integration and productivity gains, Victoria said it invested “heavily” in capital expenditure and reorganisation costs, with new ceramic tile production lines installed in Ceramiche Serra and Keraben, the operational integration of Ceramica Saloni with Keraben, a new carpet backing line commissioned at its South Wales factory as part of the integration of UK manufacturing activities, and new warehouses opened across the UK to better service customers.

With capital expenditure returning to normal levels and limited reorganisation anticipated, the company said the 2020 financial year would achieve “significant” free cash generation.

Finally, having secured new long-term debt financing in April, the firm said it was well-placed to continue to create wealth for shareholders from organic and acquisition-led growth.

“Over the last five years Victoria has steadily built what I believe to be one of the finest management teams in the industry and the value of this is demonstrated by the speed of execution and successful delivery of our productivity and margin improvement plan,” said Victoria’s group chief executive Philippe Hamers.

“Shareholders can be confident margins are steadily improving alongside continued market share growth.”

The board said it expected to announce the group's preliminary results for the year ended 30 March in July.