Victoria to beat market forecasts on full-year profit

Flooring company Victoria said in a trading update on Wednesday that its underlying profit before tax would be ahead of consensus market expectations for the year ending 2 April.

The AIM-traded firm said that group revenue was continuing to increase, driven by strong consumer demand for flooring products.

Its Italian ceramic business had its full production output now sold out until the second quarter of 2022, which the board said was “unprecedented”, with management actively working on plans to further increase capacity.

Lockdowns in Australia, meanwhile, were set to end in October, with the company expecting a strong contribution to the second half, following a “limited but profitable” contribution in the first half.

The group's extensive luxury vinyl tile product was also growing, with the product replacing laminates and sheet vinyl as a floorcovering.

It also reported strength in the artificial grass business, noting that although there had been “sharp” price increases in raw materials, preferences for locally-produced products rather than Far East imports were noticeable in Europe since the pandemic began.

The company said demand for flooring was primarily coming from existing homeowners redecorating, but it said it expected demand to continue next year and beyond due to a high level of housing transactions in many of its key markets.

Housing sales were seen as a 12-18 month leading indicator of remodelling-led demand for flooring, which is Victoria's core market.

Victoria said operating margins were “broadly maintained” during the first half, adding that although the “significant” inflationary pressures experienced earlier in the year on many raw materials had eased somewhat, energy and other costs were still rising.

Thus, the group said it would continue to actively manage input and output pricing with suppliers and customers to protect margins on a like-for-like basis.

“Managing our way successfully and profitably through the extraordinary conditions of the last 18 months, with pandemic lockdowns followed by inflation and supply challenges, has highlighted the value of having the industry's best management team at Victoria,” said chief executive officer Philippe Hamers.

“The group has achieved record operating earnings in the first half of the year and all the credit lies with the skill and dedication of the operational managers.

“The conditions we have faced in the first half will, almost certainly, continue for the rest of the year, but I am confident the group will continue to deliver for its shareholders.”

At 1146 BST, shares in Victoria were up 1.49% at 1,014.9p.