Trading Update

RNS Number : 5818T

Norcros PLC

07 October 2014

 



7 October 2014

("Norcros", the "Group" or the "Company")

Trading Update

Norcros, the market leading supplier of innovative branded showers, taps, bathroom accessories, tiles and adhesives is pleased to issue the following trading update for the 26 week period ended 30 September 2014.

Trading

Performance in the first half is in line with full year market expectations.

Group revenue for the 26 week period is expected to be in the region of £108m (2013: £111.2m) which represents year on year growth of 3.2% on a constant currency basis but 2.4% lower on a reported basis due to a weaker South African Rand. Notwithstanding the adverse impact of the South African Rand we have continued to make solid progress with Group underlying operating profit¹ expected to be 11% higher than prior year at approximately £7.4m (2013: £6.6m). Group underlying profit before taxation² is expected to be 13% higher than the prior year at approximately £6.7m (2013: £5.9m).

Revenue performance in the second quarter was stronger than the first quarter in both the UK and South Africa.

Group revenue	13 weeks to 30 Sept	26 weeks to 30 Sept
-      Reported -      Constant currency	+0.5% +5.3%	-2.4% +3.2%

Revenue from our UK businesses in the second quarter was 1.0% higher than the same period last year leaving revenue for the half year broadly flat. Triton recorded an improved performance in the second quarter with revenue 3.7% ahead of last year, resulting in first half revenue 1.2% higher than last year. Second quarter revenue at Vado was 6.2% higher than last year leaving revenue for the half year in line with the same period last year. Vado's double digit revenue growth in the UK was offset by a weaker export performance due to timing of commercial projects and distributor de-stocking, albeit much improved compared to the first quarter. Johnson Tiles first half revenue was 3.7% lower than the same period last year, with the trade sector continuing to show strong growth but offset by lower retail sector and export revenues. Underlying operating profit in the UK is expected to be ahead of last year.

Conditions in our South African markets have remained challenging. Despite this, second quarter revenue from our South African businesses grew by 15.1% on a constant currency basis leaving first half revenue 10.9% higher on a constant currency basis with underlying operating profit expected to be ahead of last year. A weaker Rand compared to last year resulted in second quarter reported Sterling revenue being 0.6% lower than the prior year and first half revenue 6.7% lower.

As noted in our 2014 report and accounts, Johnson Tiles South Africa had been experiencing a legal strike in its manufacturing facility for a significant part of the first half. It is pleasing to report that this dispute has recently been settled and that the plant continued to operate normally during the strike action. The business continues to make good progress.

Financial position

Closing net debt is expected to be in the region of £20m (2013: £28.8m), and includes the net proceeds after costs from the sale of our Australian subsidiary of £3.8m.

Outlook

UK construction activity and an improving housing market continue to drive trade sector recovery but the UK retail sector still appears to be lagging behind. The medium term outlook in South Africa continues to be positive, and assuming no further devaluation of the Rand in the year, our strong constant currency performance should start to convert to sterling growth. With an improved second quarter performance, our strong brands, leading market positions and continued self-help initiatives focused on market share gain, the Board remains confident that the Group should continue to make progress in line with market expectations for the year to 31 March 2015.

¹ Underlying operating profit is defined as operating profit from continuing operations before non-underlying and exceptional operating items.

² Underlying profit before tax is defined as profit from continuing operations before tax, non-underlying items, exceptional items, and non-cash finance charges.

ENQUIRIES:

Norcros plc	Tel: [phone]
Nick Kelsall, Group Chief Executive
Martin Payne, Group Finance Director
Hudson Sandler	Tel: [phone]
Nick Lyon
Charlie Jack
Katie Matthews

Notes to Editors

·      Norcros is a leading supplier of high quality and innovative showers, taps, bathroom accessories, ceramic wall and floor tiles and adhesive products with operations primarily in the UK and South Africa.

·      Based in the UK, Norcros operates under four brands:

·     Triton Showers - Market leader in the manufacture and marketing of showers in the UK

·     Vado - A leading manufacturer and supplier of taps, mixer showers, bathroom accessories and valves

·     Johnson Tiles - A 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 three brands:

·    Tile Africa - Chain of retail stores focused on ceramic and porcelain tiles, and associated products such as sanitary ware, showers and adhesives

·    Johnson Tiles South Africa - Manufacturer of ceramic and porcelain tiles

·    TAL - The leading manufacturer of ceramic and building adhesives

·      Norcros is headquartered in Wilmslow, Cheshire and employs around 1750 people. The Company is listed on the London Stock Exchange. For further information please visit the Company website: http://www.norcros.com/

 

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