Sales return at Norcros but SA still sluggish

NORTH West tiles and shower maker Norcros has seen demand return after a year of declining sales as a result of the global slowdown.

Its Triton shower brand outperformed the market with a 22% UK sales rise in the 18 weeks to January 31. Exports were also up, by 8%, although they were hampered by the depressed Irish housing market.

The Johnson Tiles business saw overall revenue rise by 8%, helped by a 40% lift in export sales. Overall UK sales were up by 13%, according to the group’s interim management statement.

But Wilmslow-based Norcros’s South African operations continue to suffer from weak economic conditions and reduced building activity in the country. On a constant currency basis, which shows performance unaffected by currency fluctuations, revenue at its retail operation, Tile Africa, fell by 7% – partly caused by store closures.

Johnson Tiles, Norcros’s manufacturing operation in South Africa, is more dependent on new building activity and saw revenue slump 27% in constant currency as a result of the slowdown. In contrast, TAL, the group’s adhesives operation, won new business and grew sales by 2%. A new management team in South Africa is implementing operational improvement programmes but Norcros said it was too early to judge their success.

In December the group raised £27.7m through a firm placing and placing and open offer. It has used the cash to slash debt which now stands at £19.2m.
 
In a statement the company said: “The board is alert to the risks for consumer and public spending around the forthcoming general election and its aftermath. Yet the operational and marketing performance of our UK businesses gives confidence that this year’s progress can be sustained.

“Similarly, our adhesives operation in South Africa shows every sign of retaining its market leadership and resilient performance. We believe also that we are taking the right steps to stem the losses at Tile Africa and Johnson Tiles in the second half. The group continues to trade in line with our expectations at the time of the December capital raising.”