Victoria Regulatory News (VCP)

7 Oct 2005 07:00

Victoria PLC07 October 2005 Issued by Citigate Dewe Rogerson Ltd, BirminghamDate: Friday, 7th October 2005 Embargoed: 7.00am VICTORIA P.L.C. TRADING UPDATE In advance of the announcement on 23rd November 2005 of interim results for thehalf year to 1st October 2005, the Directors of Victoria P.L.C. wish to providethe following update on current trading and the outlook for the full year. United KingdomWe stated in the Annual Report in June that, we anticipated that economic andmarket conditions were likely to remain difficult for at least the remainder ofthis financial year. Since then, consumer sentiment has deteriorated, with further falls in houseprices, a continuing low level of housing transactions and a further downturn inconsumer spending, particularly on "big ticket" items. Against this background, Victoria Carpets has accelerated its programme of newproduct introductions. On a like for like basis (i.e. excluding Axminster sales)up to the end of August, carpet sales volumes and turnover have increased by4.1%. Whilst it is pleasing to be able to make any progress in the currentenvironment, we have been prevented from reaching the levels of sales that wehad expected to achieve by the worsening market conditions. We have also seen achange in sales mix towards "value" products which carry a lower margin for us.As a result, planned improvements in the profitability of the continuingbusiness have still to come through. Moreover, having experienced significantly worse than expected trading in Augustand September, we now anticipate that consumer demand will remain depressed forthe remainder of this financial year. AustraliaThe tightening in the Australian economy is now very much in evidence and itseffects are being felt in lower consumer spending. Inevitably, and as weexpected, this has led to a reduced demand for carpets. Our strategy for the Australian market has been to maintain the increased marketshare we have attained over the last three years, and, despite the reducedmarket demand, our carpet sales volumes up to the end of August were onlymarginally down on the same period last year. Achieving this volume of sales in a market which is currently over-supplied hashowever had a cost in terms of pricing and profit margin. Although we hadanticipated margins to be tighter this year, we are currently achieving a lowerlevel of profitability than we had expected. OutlookThe interim results are expected to show a small increase over the same periodlast year. However, in the light of current trading conditions and the lack ofany visible upturn in market prospects, the Directors are now taking a morecautious view of the outlook for the remainder of the financial year. Therefore,the Group's profits for the full year are likely to be significantly lower thancurrent market expectations. The Board remains confident that each of the Group's businesses is takingadvantage of the current down-turn to improve its market position, and that theGroup remains in a strong position to exploit market conditions to the full. Despite these challenging conditions and the Board's current assessment of theprospects for the remainder of the year, the Directors are aiming, in theabsence of any further unforeseen circumstances, to maintain the level of annualdividend payment to shareholders. Enquiries:Fiona TooleyCitigate Dewe RogersonTel: 0121 455 8370Mobile: 07785 703523 Alan Bullock, Group Managing DirectorVictoria P.L.C.Today: 01484 685215 (up to 3.00pm)Thereafter: 01562 749640Mobile: 07785 325701 Mark Lee, Group Finance DirectorTel: 01562 749642 www.victoria.plc.uk This information is provided by RNS The company news service from the London Stock Exchange