Record results revealed by flooring giant
Kidderminster flooring designer, manufacturer and distributor Victoria has reported record operating results over the last six months.
Overall, the group has achieved revenue of £776.1m, versus £489m in the comparative period last year a 58.7% increase and underlying EBITDA of £100.1m compared with £84.5m last year (+18.5%).
The manufacturer also reported a loss before tax of £53.1m, with £48.7m of that being due to hyperinflation adjustments and a retranslation of overseas subsidiaries.
Victoria says its supply chains have now largely normalised and consequently is steadily reducing its raw material inventory to normal levels, which is unlocking the cash invested last year.
However, the firm is concerned about energy concerns – particularly for natural gas, which is a critical element in the manufacture of ceramic tiles. These fears have “abated” a little in recent weeks, but Victoria has invested £60m to build up levels of finished goods to maintain normal service levels for customers for up to three months in the event of extreme prices that make production uneconomic or severe gas rationing.
Victoria said: “Due to the flexibility of our factories, reducing inventory levels in the future is straightforward and inexpensive but, over the winter period, we will maintain higher than normal levels of finished goods”.
The last six months has seen a continuation of double-digit inflationary pressures for Victoria in certain costs – most notably energy and polypropylene carpet fibre. The firm says it has chosen to support customers by sharing the impact of higher input costs with them whilst protecting cash margin through increasing prices where “absolutely necessary”, hedging key input costs and product engineering in partnership with customers to achieve targeted price points.
Geoff Wilding, Executive Chairman of Victoria PLC commented: “Integration of recent acquisitions is proceeding apace and on schedule. Consequently, the Board believes cash flow, after exceptional costs relating to the integration projects, will be in excess of £100 million in H2.
“In the near term it is likely that disposable incomes in some markets will come under further pressure, from higher interest rates and inflation and the resulting weakening consumer demand may make additional price increases to offset higher input costs more difficult for the Company to implement.
“Nevertheless, whilst acknowledging these challenges, I am pleased to say that the Board continues to be confident that synergy gains and proactive management actions will enable Victoria’s financial performance for FY2023 to be in line with market consensus expectations and the outlook for the business remains positive.”