Last checked at 15 Oct 2020 07:00
15 October 2020
Trading Update
Norcros plc ("Norcros" or the "Group"), a market leading supplier of high quality and innovative bathroom and kitchen products, will announce its interim results for the 26-week period ended 4 October 2020 on 12 November 2020. In advance of this, the Group is providing the following trading update.
Trading
Since the AGM update in July, the strong trading momentum has continued with a marked recovery in demand in the second quarter in both the UK and South African businesses. This has resulted in the Group delivering a sustained level of profitability in the second quarter combined with excellent cash generation as our pre COVID-19 inventory levels continued to satisfy customer demand. Group revenue for the second quarter (13 weeks: 2019 14 weeks) is expected to be 105% of prior year on a constant currency like for like2 basis reflecting market share gains in our major channels.
Group revenue for the 26-week first half (2019: 27 weeks) is expected to be approximately £135.3m (2019: £181.2m), 75% of prior year revenue on a reported basis, 80% on a constant currency basis and 83% on a constant currency like for like2 basis.
Revenue % of prior year | |||||
First Quarter | Second Quarter | Second Quarter (LFL2) | Half Year | Half Year (LFL2) | |
UK | 62% | 96% | 104% | 81% | 84% |
South Africa | 42% | 81% | 87% | 63% | 66% |
South Africa (at CC1) | 50% | 99% | 106% | 76% | 79% |
Group | 55% | 91% | 98% | 75% | 78% |
Group (at CC1) | 58% | 97% | 105% | 80% | 83% |
1CC refers to constant currency basis
2LFL (like for like) adjusts prior year revenue for 27 to 26 week period pro-rating
Our UK business has continued to perform strongly and we expect to report H1 revenue of approximately £93.7m (2019: £115.6m), with second quarter revenue at 104% and half year revenue at 84% on a like for like2 basis. Merlyn, Triton and Vado experienced a marked recovery in the second quarter with revenue ahead of prior year on a like for like2 basis benefiting from their leading market positions, stock availability and superior service.
Our South African business also continued to make good progress and we expect to report H1 revenue of approximately £41.6m (2019: £65.6m), with second quarter revenue at 106% and half year revenue at 79% of the same period last year on a constant currency like for like2 basis. The performance reflects a strong recovery in the Tile Africa business in the retail renovation market.
Financial Performance and Position
Reflecting the strong recovery in trading in the second quarter and the decisive actions taken to deal with the unprecedented impact of COVID-19 it is pleasing that the Group is expected to report a pre-IFRS 16 underlying operating profit of approximately £12m for the first half (2019: £17.1m), underlining the resilience of the Group's business model, the strength of its market leading positions and its well established supply chains.
As a result of the strong recovery in trading and the continued focus on cost alignment and cash preservation it is expected that Group net debt will have reduced to circa £8.0m at the half year (2019: £41.1m). This is a significant reduction on the £36.4m reported at the year end and in leverage with Net Debt: LTM EBITDA of approximately 0.2 times compared to 0.9 times at the year end.
Dividend
The Board recognises the importance of dividends but does not expect to declare an interim dividend when it publishes its results on 12 November 2020. However, the Board will consider recommending a final dividend for the full year subject to the Group's continued strong trading performance, financial position and outlook.
Outlook
Our businesses have adapted swiftly to ensure that they operate safely and cost effectively and have recovered strongly from the initial impact of the pandemic. Notwithstanding the ongoing uncertainty as governments seek to control COVID-19, Norcros continues to be in a very strong competitive and financial position. Given this, its leading market positions, established brands, broad distribution channels and experienced management team the Group remains well positioned to sustain the strong progress and recovery of the second quarter.
Enquiries
Norcros plc | Tel: 01625 547700 |
Nick Kelsall, Group Chief Executive | |
Shaun Smith, Group Finance Director | |
Hudson Sandler | Tel: 0207 796 4133 |
Nick Lyon | |
Molly Streeton | |
Notes to Editors
Norcros is a market leading supplier of high quality and innovative bathroom and kitchen products with operations primarily in the UK and South Africa.
· Based in the UK, Norcros operates under seven brands:
· Triton - Market leader in the manufacture and marketing of showers in the UK
· Merlyn - The UK and Ireland's No.1 supplier of shower enclosures and trays to the residential, commercial and hospitality sectors
· Vado - A leading manufacturer and supplier of taps, mixer showers, bathroom accessories and valves
· Croydex - A market-leading, innovative designer, manufacturer and distributor of high quality bathroom furnishings and accessories
· Abode - A leading niche designer and distributor of high quality kitchen taps, bathroom taps, and kitchen sinks
· Johnson Tiles - The leading manufacturer and supplier of ceramic tiles in the UK
· Norcros Adhesives - Manufacturer of tile & stone adhesives, grouts and related products
· Based in South Africa, Norcros operates under four brands:
· Tile Africa - Chain of retail stores focused on ceramic and porcelain tiles, and associated products such as sanitaryware, showers and adhesives
· Johnson Tiles South Africa - Manufacturer of ceramic and porcelain tiles
· TAL - The leading manufacturer of ceramic and building adhesives
· House of Plumbing - Market leading supplier of specialist plumbing materials
· Norcros is headquartered in Wilmslow, Cheshire and employs around 2,000 people. The Company is listed on the London Stock Exchange. For further information please visit the Company website: http://www.norcros.com