Norcros upgrades full year profit estimates following pleasing first half
Wilmslow-based bathroom and kitchen supplies group Norcros has upgraded its profit forecast for the year, following a particularly strong first half.
In a trading update this morning, it said the group’s outperformance of the market experienced in the second half of the prior year has continued in the first half of this year, reflecting both increased activity in the UK and South Africa RMI markets and the strength of its customer proposition.
Group revenue for the 26 week period is expected to be approximately £200m, compared with £135.3m in 2020 and £181.2m in 2019, 49% higher on a reported basis than the COVID-19 impacted prior year (2020) and 18% higher than 2019 on a constant currency like for like basis.
The UK business has continued to perform strongly, with revenue for the 26 week period 18% higher than in 2019 on a like for like basis reflecting increased demand in the RMI sector and market share gains, with the Triton and Merlyn brands continuing to perform extremely well.
The South African business has also continued to outperform, with revenue for the 26 week period 20% higher than in 2019 on a constant currency like for like basis, with Tile Africa continuing to benefit from higher demand and market share gains in the retail renovation market.
The balance sheet remains very strong with net cash of approximately £1m (pre-IFRS16) compared with net cash of £10.5m as at March 31, 2021. During the period the group has replenished inventory levels and paid the prior year declared dividend.
The group’s market outperformance in the first half of this financial year reflects the strength of its focused operating model, its market leading brands, broad distribution channels, well developed supply chain infrastructure and stock availability, it said.
The strength ofits leading customer proposition has resulted in an excellent performance, and Norcros expects to report an underlying operating profit in the first half of the year of no less than £21m, compared with £12.8m in 2020 and £17.4m in 2019.
As previously referenced, supply chain challenges, increased energy costs, inflationary cost pressure and a normalisation of consumer spending patterns mean that uncertain market conditions are likely to prevail during the remainder of the financial year.
However, the group said notwithstanding these factors, and based on the excellent first half performance and its strong revenue momentum, it expects underlying operating profit for the year to March 31, 2022, to be significantly ahead of the board’s previous expectations.
The group will announce its interim results for the 26 week period ended October 3, 2021 on November 11.