Norcros Reports A 'Marked Recovery And Strong Financial Position'

Norcros, a market leading supplier of high quality and innovative bathroom and kitchen products, today announces its results for the six months ended 30 September 2020.

Financial Summary

Highlights

·    Marked recovery in demand in the second quarter with 4.5% constant currency like for like revenue growth on prior year largely reflecting an uplift in RMI activity

·    Half year revenue of £135.3m (2019: £181.2m), 75% of prior year revenue on a reported basis and 83% on a constant currency like for like basis, principally a result of the impact of COVID-19

·    Underlying operating profit of £12.8m (2019: £17.4m) reflecting strong recovery in the second quarter underlining the Group's resilience

·    Significant reduction in net debt to £7.3m (2019: £41.1m) due to continued focus on cost alignment and cash preservation

·    Strong financial position with leverage, Net Debt: LTM EBITDA of 0.2 times with significant liquidity and funding headroom 

UK Performance

Our UK business has recovered strongly from the COVID-19 lockdowns with half year revenue of £93.7m (2019: £115.6m), 81% of prior year on a reported basis and 84% on a like for like basis. In response to the COVID-19 pandemic and associated lockdowns we suspended our main manufacturing and assembly operations during March in a controlled way to safeguard our employees with c70% of the workforce at its peak furloughed during the first quarter with reported revenue of 62% of prior year. During this time we continued to service our customers, particularly those with online sales capabilities, with a skeleton staff working predominantly from their homes where possible. As the lockdowns eased our UK facilities reopened ensuring COVID-19 secure environments for all our workforce with our manufacturing capacity aligned with our inventory levels and demand. The second quarter witnessed a strong recovery in demand with revenue at 96% of prior year on a reported basis and 104% on a like for like basis as our businesses benefitted from an uplift in RMI activity with strong growth in our retail and online channels. Our leading market positions, strong brands, stock availability and superior service meant we were able to capitalise on the strong rebound in trading and grow market share.

Underlying operating profit was £10.8m (2019: £12.5m) in the period, largely reflecting the impact of COVID-19 on trading in the first quarter,  the receipt of £4.1m of coronavirus job retention support from the UK and Irish governments and the strong recovery in the second quarter.

Nick Kelsall, Chief Executive Officer, commented: "Our business and our employees have responded admirably to the challenges of COVID-19 and we are grateful for their contribution. The resilience and flexibility of our operating model including our well established supply chains and excellent customer service have ensured that we have emerged in a strong position as our markets and customers have reopened. We have recovered strongly with second quarter revenues increasing by 4.5% against prior year on a constant currency like for like basis. Notwithstanding the ongoing uncertainty as governments seek to control COVID-19, including the current lockdowns, Norcros continues to be in a very strong competitive and financial position. All our facilities are operating and the vast majority of our customer base continue to trade. Given this, its leading market positions, established brands, broad distribution channels and experienced management team the Group remains well positioned to sustain the strong progress and recovery of the second quarter."

Source : Norcros

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