UK DIY News
Norcros Forecasts Annual Group Revenue of £331m
Norcros, a market leading supplier of high quality and innovative bathroom and kitchen products, will announce its preliminary results for the year ended 31 March 2019 on 12 June 2019. In advance of this, the Group is providing the following trading update.
Trading
Group underlying operating profit1 for the year is expected to be in line with the Board's expectations, reflecting a very resilient performance in the context of particularly challenging conditions in our major markets. This will represent the Group's tenth consecutive year of revenue and underlying operating profit growth.
Group revenue for the year is expected to be in the region of £331m (2018: £300.1m), 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 basis2.
| Reported
FY | Constant Currency
FY | Constant Currency LFL2
H1 H2 FY | ||
UK
| +13.6% | +13.6% | -4.1% | +3.7% | -0.2% |
South Africa
| +3.7% | +7.5% | +7.1% | +7.9% | +7.5% |
Group
| +10.3% | +11.6% | -0.3% | +5.1% | +2.4% |
UK revenue was 13.6% higher than the prior year, principally reflecting the full year contribution from Merlyn which has continued to perform strongly since acquisition. The UK performance on a like for like basis2 reflected strong revenue growth of 3.7% in the second half driven by market share gains as new range listings were secured benefiting from access to the Group's extensive customer base and its strong financial position.
Our South African business again delivered strong revenue growth despite a challenging market environment, 7.5% higher than the prior year on a constant currency basis and 3.7% higher on a reported basis, continuing the outperformance of recent years.
Financial position
Net debt at 31 March 2019 is expected to be around £36m (2018: £47.1m), reflecting strong cash generation in the second half of the year.
As previously announced, Norcros completed the acquisition of the South African based business RAP Plumbing Supplies (Proprietary) Limited, trading as House of Plumbing ("House of Plumbing") on 1 April 2019 and will consolidate the financial results of the business from this date.
Nick Kelsall, Group Chief Executive, said:
"The Group expects to deliver its tenth consecutive year of revenue and underlying operating profit growth despite the uncertain economic and political backdrop in our two main markets.
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.
Our performance continues to demonstrate the resilience of our 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."
1 Underlying operating profit excludes IAS 19R administrative expenses, acquisition related costs and exceptional operating items
2 LFL / like for like excludes Merlyn revenues (acquired 23 November 2017)
Source : Norcros
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