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Norcros Confirms Closure Of Norcros Adhesives In Trading Update
Norcros plc ("Norcros" or the "Group"), a market leading supplier of high quality and innovative bathroom and kitchen products, will announce its Preliminary Results for the year ended 31 March 20231 on 15 June 2023. In advance of this, the Group is providing the following trading update.
Full year trading performance - Underlying operating profit up 10% and in line with market expectations2
The Group has continued to demonstrate resilience in its business model, trading well against the challenging macroeconomic backdrop and the Board expects underlying operating profit for the year to 31 March 20231 to be at a record level and in line with market expectations2.
Group revenue for the year ended 31 March 20231 is expected to be approximately £440 million (2022: £396.3 million), 11.3% above prior year on a reported basis and 1.5% above on a constant currency "CC3" and like for like4 "LFL" basis.
| Revenue increase on prior year | |||
| Reported | LFL4 | ||
| FY | H1 | H2 | FY |
UK | 15.2% | (3.4%) | 3.3% | (0.2%) |
South Africa | 3.9% | 10.0% | (2.2%) | 3.9% |
South Africa at CC3 | 4.6% | 9.7% | (0.6%) | 4.6% |
Group | 11.3% | 1.2% | 1.3% | 1.3% |
Group at CC3 | 11.5% | 1.1% | 1.9% | 1.5% |
Our UK business has continued to perform well, with revenue at 15.2% above prior year on a reported basis and broadly in line with prior year on a LFL4 basis. Our performance demonstrated the breadth of our distribution channels, strong stock management and excellent levels of service resulting in market share gains.
Our South African business continued to perform robustly, despite market conditions being more challenging in the second half of the year, gaining share as a result of our market leading positions and stock availability. Reported revenue for the year was 3.9% higher than prior year and 4.6% higher than prior year on a constant currency basis.
Financial position and extension of banking facilities
The Group remains in a strong financial position with net debt (on a pre-IFRS 16 basis) at 31 March 20231 expected to be circa £50 million (2022: net cash of £8.6 million). The year on year movement principally reflects the acquisition of Grant Westfield.
The Group has extended its £130 million multicurrency revolving credit facility ("RCF") for a further year. The facility has a three year and seven month term to October 2026, with a further year extension available. It also includes the option for an uncommitted accordion facility of £70 million.
Norcros Adhesives - closure
It is with regret we have commenced the closure of Norcros Adhesives, a small but loss making division with the loss of 70 jobs. Norcros Adhesives represented approximately 3% of Group revenue in the year. The revenues and approximately £3 million of underlying operating losses are included in the underlying financial results for the year. In addition, costs relating to the closure of circa £5 million (of which circa £2 million represents the gross cash cost) will be separately reported as an exceptional item in the results to 31 March 20231. This represents a cash payback period of less than one year. The net impact on cash is not expected to be significant.
Notice of results
The Group will announce its full year results for the year ended 31 March 20231 on Thursday 15 June 2023.
Thomas Willcocks, Chief Executive Officer, said:
"Norcros has delivered record results, again demonstrating resilience and market share growth, notwithstanding the significant macroeconomic challenges. Whilst market conditions are likely to remain uncertain in the short term, the Board believes that the Group's proven business model, leading customer service proposition, leading brands and highly experienced management teams will continue to deliver market share growth in the year ahead.
Whilst I have been with the Group since 2006, and a member of the Executive team at Norcros since August 2021, I was delighted to join the Board from 1 April 2023 as CEO. I would like to take this opportunity, on behalf of myself and the Board, to thank Nick Kelsall for his outstanding commitment to the Group over the last thirty years. He has left the Group in an excellent position to continue growing market share in what remain fragmented and attractive markets. We wish him a long and healthy retirement."
1. The accounting reference 'year to 31 March 2023' relates to the 52-week accounting period commencing on 4 April 2022 and ending 2 April 2023
2. Norcros compiled market consensus for the year to 31 March 2023 underlying operating profit is £45.9 million
3. CC refers to constant currency basis
4. LFL excludes Grant Westfield, which was acquired on 31 May 2022
Source : Norcros PLC
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