Norcros makes gains in market share
THE COLLAPSE of tile maker Pilkington’s and an improved product range has provided a boost to the fortunes of Wilmslow-based competitor Norcros.
The company this morning reported an increase in sales to £97.3m for the 27 weeks to to September 30 – up 17.2% on a 26-week period last year. It also managed a dramatic turnaround in profitability, declaring a pre-tax profit of £6.8m after exceptionals, compared with a loss of £4.2m in the same period last year.
“The significant improvement in the group‘s performance compared to last year is particularly encouraging given the continuing tough trading conditions and the uncertain economic environment,” said chairman John Brown.
“The results reflect the benefit of management decisions taken over the last two years to invest significantly in new product development, to pursue a more focused sales and marketing strategy and to improve the efficiency of our operating cost base.”
The firm said that its overall UK revenues were up 10.7%, with like-for-like sales 6.4% higher.
It said that Triton Showers’ revenues were up 9.1% on a like-for-like basis, compared with an overall market growth of 4%. Chief executive Joe Mathews told TheBusinessDesk.com that this was due to a number of key account wins with the likes of B&Q and Wickes, as wells as with a number of independent builders’ merchants.
Similarly, despite a 5% decline in the tiles market, its Johnson Tiles business enjoyed sales growth of 7.5% and like-for-like improvements of 3.3%. Brown said that the collapse of Pilkington’s had let to the business targeting and securing “additional orders in both the DIY multiples and social housing sectors”.
Matthews said that although Pilkington’s demise had not had a huge impact in the trading period to September (the firm collapsed in June), he expected it to feed through more strongly to the firm’s results second half results to March. He also credited an investment in new products and its sales and marketing functions for its improved performance.
In South Africa, the firm said that sales increased by 11% on a constant currency basis to £37.3m and that like-for-likes were up by 7.1%, but it sounded a note of caution on the fragility of the market. Although South Africa had enjoyed a recovery in GDP growth of around 4.6%, the building market has slowed considerably. Some 65% of its tile sales go into new-builds, and the rate of new housebuilding is down 20%, while new commercial building projects fell by 22%.
Matthews said that the firm had achieved a strong performance in South Africa while “fighting into a headwind”. This was as a result of tough decisions taken last year when it closed many unprofitable tile retail stores and restructured the management team in its tile manufacturing business.
He said that last year’s rights issue and the resultant performance has left Norcros with a strong balance sheet. The firm reinstated its dividend, paying an interim dividend of 0.2p per share, and although economic conditions remain uncertain, he remained confident about its prospects.
“We have plenty of momentum in our existing businesses which we believe we can drive very, very hard,” he said.
