Norcros makes further redundancies at Johnson Tiles

Norcros, the market leading supplier of innovative branded showers, shower enclosures and trays, taps, bathroom accessories, tiles and adhesives, has updated the market on trading for the year, ahead of publishing its preliminary results for the year ended 31st March 2018.

The company has confirmed it is to continue to reorganise its Johnson Tiles UK business, resulting in the loss of 50 jobs:

"In 2017 we implemented a restructuring at Johnson Tiles UK designed to improve its operating performance and increase manufacturing flexibility. Notwithstanding the benefits of this restructuring the business remains loss making as market conditions experienced in the second half proved more challenging than expected.

As a result, the Board has implemented a further restructuring programme which will involve the loss of up to 50 jobs. This will result in a charge of around £2.1m, to be treated as an exceptional item and recognised in the financial year ended 31 March 2018 with the subsequent cash outflow occurring in the first half of 2018/19. Annualised savings are expected to be at least £2m."

Trading

Group underlying operating profit for the year is expected to be in line with the Board's expectations.

Group revenue for the year is expected to be in the region of £300m (2017: £271.2m), 10.7% higher than the prior year on a reported basis, 8.7% higher on a constant currency basis, and 4.4% higher on a constant currency like for like basis.

UK revenue for the year was 10.0% higher than the prior year reflecting in part the first time contribution from Merlyn which was acquired on 23 November 2017. Merlyn has been seamlessly integrated into the Group and performed in line with the Board's expectations.
On a like for like basis2, UK revenue was 3.6% higher than the prior year. Second half UK LFL revenue declined by 0.8% compared to the 8.5% growth seen in the first half. This was largely due to lower retail revenues at Johnson Tiles and a tough comparative period last year. Johnson Tiles apart, H2 UK LFL revenue was 8.4% higher (H1 +11.4%).

 Our South African business again delivered strong revenue growth despite a challenging market environment, 6.0% higher than the prior year on a constant currency basis and 12.0% higher on a reported basis, continuing the sustained progress of recent years.

Financial position

Closing year end net debt is expected to be around £48m (2017: £23.2m), in line with the Board's expectations. Pro forma Net Debt to EBITDA is expected to be circa 1.3x, in line with the guidance at the time of the Merlyn acquisition.

Nick Kelsall, Group Chief Executive, said:

"The Group expects to deliver its ninth consecutive year of revenue and underlying operating profit growth despite increased market headwinds. This trading performance continues to demonstrate the resilience of the Group's business portfolio and operating model.

The Group continues to focus on complementary growth opportunities, both organic and via acquisition. It is pleasing to note the strong performance of Merlyn, our largest and most recent acquisition. We are confident that Merlyn will prove to be a valuable addition to the Group and we are exploring a number of new business opportunities working with our other Group businesses.

We are pleased with our overall performance during the year. Despite a backdrop of challenging market conditions, the Board believes that the resilience of our diversified business portfolio and the strength of our market positions leaves the Group well placed to make further progress."

Norcros' preliminary results will be released on 13th June 2018.

Source : Insight DIY and Norcros

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