Confident Norcros on acquisition trail

TILE and shower group Norcros has the financial firepower and the willingness to acquire, should suitable opportunities arise, accordign to chief executive Nick Kelsall.

The Triton Showers and Johnsons Tiles has £30m of a £51m banking facility from Lloyds, Barclays and Handelsbanken available for cash drawings, meaning that it can move speedily if needs be.

Mr Kelsall was speaking after Wilmslow-based Norcros posted strong annual results which showed underlying profits rising 5% to £10.3m on sales up 2% to just over £200m.

He said: “We are pleased with the results and feel we now have a good platform from which to move forward. We have focused on organic growth and new product launches to move the business forward, but given the strength of our balance sheet, if there’s a compelling bolt-on acquisition out there we’d be look at it.

“It would have to be the right fit, but we have got the wherewithall to really move forward.”

Even without a foray to deal-making broker Numis believes Norcros shares are an attractive ‘buy’.

Numis analysts said: “Norcros has demonstrated a strong performance in difficult markets in the UK,while early signs of self-help actions in South Africa are also starting to take effect.

“We believe that these drivers will be maintained over this year and next, though in the absence of macro growth South Africa will be the largest swing factor for the group. The material valuation discount to peers in the UK merchanting space is unjustified, and we retain a Buy recommendation.”

Numis forecasts annual sales to grow to £203m in FY 2013 and profits to clim to £11.7m.

Assessing its UK prospects – where Nocros has gained traction with B&Q owner Kingfisher – analyst Chris Millington said: “While we expect that UK conditions will remain challenging in the current year, we expect Norcros to maintain market share gains, while cost pressures should lessen.”