Profits warning at Norcros

SHOWER and tile group Norcros today warned that profits will be lower than expected, but added it is confident it can weather storm.

The group, which owns Triton Showers and Johnson Tiles, said in the four months to the end of February, overall revenues are down by 12.7%.

Sales in the UK business are down 17.3%, however Norcros said margins have been “largely maintained” as a result of tight spending controls and cost reduction programmes.

In South Africa, the business has been hit by the decline in Sterling and the Rand against the US Dollar and Euro, and revenues fell 3%. Norcros said that profits continue to be impacted by the investment in new stores and higher costs as well as inefficiencies in its tile manufacturing operations.

It added that its retail business, Tile Africa, is benefiting from store expansion and upgrade programmes, and sales are up 5%.

Norcros said that despite reductions in energy costs, the drop in Sterling has more than negated the impact of falling oil prices.

It added that trading in January was slower than expected and although February and March are traditionally strong trading months, the current economic background made it difficult to forecast future revenues.

Chief executive Joe Matthews said: “In the absence of any further deterioration in the trading environment, we expect full year profits before exceptional items to be approximately 10% lower than market expectations.

“Trading conditions are difficult and are likely to remain challenging throughout 2009. However our businesses are broadly holding their own and responding quickly to market changes. We are confident that our shower and tile brands will not only hold up through the downturn but are well positioned to take any advantage of any market opportunities.”