Bathroom supplies group raises profit forecasts due to continued strong trading
Wilmslow-based bathroom supplies group Norcros raised profit expectations for its full year, today, and announced the departure of its chair, Mark Allen.
In a trading update ahead of its annual results on June 10, the business said it outperformed previous expectations in March and ended the fiscal year strongly, leading to an uplift in its underlying operating profit forecast to no less than £33m for the year to March 31, 2021. This is ahead of previous guidance of no less than £31m and the £32.2m reported last year.
Group revenue for the year is expected to be in the region of £324m, compared with £342m in 20202, 95% of prior year on a reported basis and 101% on a constant currency like-for-like basis.
Norcros said it has seen a strong recovery in the second half with revenue 120% of the prior year on a constant currency like-for-like basis, compared with 83% in the first half of the year, which was severely impacted by the COVID-19 pandemic, particularly in the first quarter.
The UK business has continued to perform strongly with revenue for the second half at 115% of prior year on a like-for-like basis, reflecting the increased activity in the repair, maintenance, and improvement (RMI) sector. The Triton and Merlyn brands have both performed extremely well, gaining market share.
The South African business also continued to outperform – revenue for the second half was 123% higher on a like-for-like basis and 130% of prior year on a constant currency like-for-like basis, with further growth, particularly in Tile Africa, reflecting market share gains in the retail renovation market.
Due to the strong recovery in trading during the second half of the year and the effective management of working capital, the group expects to end the year with net cash of circa £10m, compared with a net debt of £36.4m the previous year.
Chief executive, Nick Kelsall, said: “The group has recovered very strongly from a period of unprecedented uncertainty.
“Our performance on all fronts is a testament to our business model and our employees, particularly against the backdrop of challenging markets as demand adjusts to the impact of the pandemic and Brexit.
“It is particularly pleasing to see how well our businesses, both in the UK and South Africa, responded, taking advantage of the growth opportunities in the RMI segments and continuing to gain market share, benefiting from their leading brands, supply chain infrastructure and stock availability.”
He added: “Whilst market conditions are likely to remain challenging, the board is confident that the group’s highly experienced management teams, resilient business model, increased financial strength and our focused growth strategy will continue to drive outperformance leading to further progress in the year ahead.”
The group also announced today that board chair and non-executive director, Mark Allen, has tendered his resignation which has been accepted with effect from today.
David McKeith, the senior independent director has assumed the role of acting board chair. It is intended that he will continue in this role until Norcros appoints a new non-executive director as board chair.
Mark Allen said: “It is with a great deal of sadness that I have tendered my resignation from the board of Norcros. Unfortunately, my other business commitments do not allow me sufficient time to devote to the company.”
David McKeith said: “The board of Norcros would like to thank Mark for his contribution to the group and to wish him well in his other current and future directorships.”