Norcros Forecasts Robust Half-Year Performance

Norcros, a market leading supplier of high quality and innovative bathroom and kitchen products will announce its interim results for the half year ended 30 September 2018 on 15 November 2018. In advance of this, the Group is providing the following trading update.

Trading

Group underlying operating profit¹ for the first half is expected to be in line with the Board's expectations reflecting a robust performance and continuing to demonstrate the financial resilience of the Group.

Group revenue for the first half is expected to be approximately £162.5m (2017: £145.0m), 12.1% higher than the prior year on a reported basis, 13.2% higher on a constant currency basis, and level on a like for like² constant currency basis. This performance reflected strong organic revenue growth of 4.4% in the Group, excluding the significantly lower revenue from Johnson Tiles which was anticipated and largely due to the Kingfisher unified programme as previously reported.

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)

UK revenue for the first half was 16.4% higher than the prior year, reflecting in part the contribution from Merlyn, which continued to perform strongly in the period. On a like for like basis² , and excluding Johnson Tiles, UK revenue was 2.5% higher, reflecting a very resilient performance as trading conditions, particularly in the UK retail sector and a number of export markets, were challenging. The restructuring of the Johnson Tiles business, as announced in April, is proceeding to plan with the business back into profit in the first half.

Revenue grew in our South African business by 7.1% compared to the prior year, on a constant currency basis and by 3.9% on a reported basis reflecting the weaker South African Rand.

Financial position

Closing half year net debt is expected to be around £54m (2017: £20.8m), in line with expectations following the acquisition of Merlyn in the second half of last year.

Outlook

The robust performance in the first half against the backdrop of a challenging trading environment continues to demonstrate the strength of our market positions, our leading brands and the financial resilience of our diversified business model. The Board remains confident that these attributes will continue to drive market outperformance and will enable the Group to make further progress in line with its expectations for the year to 31 March 2019.

Source : Insight DIY Team and Norcros