Victoria rolling out the red carpet for new customers – and believes profits will follow

Floorcoverings group Victoria believes its pursuit of market share now will “materially enhance” profits next year.

The Kidderminster-based company has been absorbing rising costs in raw materials and says it has been growing revenues in “difficult market condition”.

It estimates the market in the UK and Australia is down 6-8% and is flat in Europe.

In a statement, the company said: “With the strategy continuing to deliver increasing revenues and meaningful market share gains, the key now is to ensure margins continue to increase.

“In the November announcement the Group referenced plans to recover some margin gains temporarily foregone in the drive for top-line growth.

“Almost all these actions Victoria planned to take to increase margins have now been successfully completed.”

Victoria’s share price fell by more than half between Augist and October 2018

The company was surprised by the reaction it got from investors in the autumn when its shares plunged 35% in two days, wiping more than £260m off its market value.

The sell-off began after the floorcoverings group announced plans for a bond issue alongside a warning that its margins are up to 1.5 percentage points below consensus market forecasts

Up until last summer Victoria had enjoyed four years of steady growth in its share price, supported by regular and successful acquisitions.

This morning’s announcement to the stock market acknowledged that its decision to pursue market share “unsettled some shareholders” last November and said it was now providing “a considerable degree of granularity about the actions” it had taken.

It is forecasting the current financial year, to March, will deliver underlying pre-tax profits that are up to 39% higher than last year’s £40.8m, benefitting from eight months’ contribution from Ceramica Saloni.