Norcros performing well in face of tough market conditions
Bathroom and kitchen products supplier Norcros updated the market on its trading on Wednesday, reporting that group underlying operating profit for the year just ended was expected to be in line with the board's expectations.
The London-listed firm said that reflected a “very resilient” performance in the context of challenging conditions in its major markets, and would represent its 10th consecutive year of revenue and underlying operating profit growth.
Group revenue for the year ended 31 March was expected to be in the region of £331m - 10.3% higher than the prior year on a reported basis, 11.6% higher on a constant currency basis, and 2.4% higher on a constant currency like for like basis.
UK revenue was 13.6% improved than the prior year, which the board said primarily reflected the full-year contribution from Merlyn, which had continued to perform “strongly” since acquisition.
The UK performance on a like-for-like basis reflected strong revenue growth of 3.7% in the second half, which was reportedly driven by market share gains as new range listings were secured, benefitting from access to the group's customer base and its strong financial position.
Its South African business also delivered strong revenue growth despite a challenging market environment, Norcros said, with the total being 7.5% higher than the prior year on a constant currency basis and 3.7% higher on a reported basis.
Net debt as at 31 March was expected to be around £36m, narrowing from £47.1m year-on-year and reflecting “strong” cash generation in the second half.
As it had previously announced, Norcros completed the acquisition of the South African business RAP Plumbing Supplies, trading as House of Plumbing, on 1 April, and would consolidate the financial results of the business from that date.
“The group expects to deliver its 10th consecutive year of revenue and underlying operating profit growth despite the uncertain economic and political backdrop in our two main markets,” said Norcros group chief executive officer Nick Kelsall.
“It is particularly pleasing to note the strong performances of Merlyn and Triton as well as the return to profitability of Johnson Tiles UK following the restructuring of the business, as announced in April 2018.
“We are also pleased to have recently added the House of Plumbing business to our portfolio as we look to accelerate the growth of our South African business in the important commercial and specification market segments.”
Kelsall said the company’s performance continued to demonstrate the resilience of the group with its market leading positions, well-established brands, superior product and service offer and strong financial position.
“Whilst market conditions are likely to remain challenging, the board is confident that these attributes together with our very focussed strategy will continue to drive market outperformance leading to further progress in the year ahead.”
Norcros said it would release its preliminary results for the year ended 31 March on 12 June.