Norcros: Trading Continues To Gather Momentum

Norcros plc ("Norcros" or the "Group"), a market leading supplier of high quality and innovative bathroom and kitchen products, issues the following trading update for the 16 week period ended 26 July 2020 ahead of its Annual General Meeting which takes place at 11.00am today.

Trading Update

Trading continues to gather momentum as the COVID-19 lockdowns have gradually been lifted, with year to date revenue for the 16 weeks to 26 July 2020 at 65% of the same period last year on a reported basis and 68% on a constant currency basis.

It is pleasing to report that Group activity levels have continued to increase since the start of the financial year with revenue in June at 90% of June last year and July currently running at 108% of the same period last year both on a constant currency basis. 

Note: CC refers to constant currency basis

Our UK business has recovered well with June's revenue at 91% of the same period last year as builders and contractors returned to work and independent showrooms and retailers reopened, and July's month to date revenue is 115% of the same period last year. We continue to reopen our facilities and align capacity with demand and inventory levels, with the number of staff furloughed being reduced accordingly, whilst ensuring the safety and welfare of our people at all times.

We have also made good progress in South Africa with year to date revenue at 50% of prior year on a reported basis and 59% on a constant currency basis, with June revenue at 89% of last year on a constant currency basis and July month to date revenue at 95% on a constant currency basis. All our manufacturing facilities and retail outlets are now fully operational with the appropriate precautions in place for our staff and customers.

Overall, the Group broke even at the underlying operating profit level in May with a return to profitability on the same basis in June resulting in a small underlying operating profit for the first quarter.

Strong balance sheet and liquidity

As outlined in our year end statement of 25 June, in response to the sharp impact of COVID-19 we took immediate action to preserve cashflow and reduce costs. Group net debt has reduced to £35.2m at the end of June compared with £36.4m at the year end. Net Debt: LTM EBITDA at the end of June was 1 times compared to 0.9 times at the year end.

Board changes

As previously announced, Martin Towers will step down as a Non-Executive Director and Board Chair at the conclusion of today's AGM. Mark Allen joined the Board as a Non-Executive Director and Board Chair designate on 1 May 2020 and will, subject to his successful election as a director at today's AGM, take over as Board Chair.

Nick Kelsall, Group Chief Executive, commented:

"We have reacted swiftly to adapt our businesses to operate safely and as cost effectively as possible. Our main markets are recovering from the impact of the pandemic and Norcros is emerging in a robust competitive position with a strong balance sheet and a well developed pipeline of new products. We are pleased that we have achieved what we set out to do some five months ago. 

As our main economies emerge from the impact of the pandemic the shape of the recovery in demand for our products remains uncertain. Notwithstanding, Norcros is in a strong competitive position with significant funding and liquidity headroom. Its leading market positions, well established brands, broad distribution channels and experienced management teams mean the Group is well positioned to continue to take market share and return to growth as soon as practicable."

Source : Norcros

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