Norcros revenue falls, operating profit rises

Bathroom and kitchen products supplier Norcros reported revenue of £392.1m in its full-year results on Thursday - a decrease of 11.1% from the prior year, or 6% on a constant currency like-for-like basis.

The London-listed firm said underlying operating profit for the 12 months ended 31 March fell 8.7% to £43.2m, though the underlying operating margin improved slightly to 11.0%.

Operating profit saw a significant increase of 45.1% to £39.9m.

Diluted underlying earnings per share decreased 14.2% to 32.1p, while underlying operating cash flow surged 25.9% to £56.4m.

Underlying net debt narrowed by 35.3% to £37.3m.

The company reported record underlying profit in the UK and Ireland at £38.4m, with an operating profit margin of 13.6%.

In South Africa, it said the market was gradually recovering from significant energy interruptions, positioning Norcros to gain market share.

Its strategy had driven market share gains and margin accretion, supported by portfolio development, organic growth, operational excellence, and strong ESG initiatives, including the SBTi validation of carbon emissions targets.

The board said the sale of Johnson Tiles UK post-year-end had strengthened its portfolio mix.

Despite the revenue decline, the company maintained its dividend at 10.2p per share.

Norcros announced medium-term strategic targets, aiming for organic growth 2% to 3% above the market, an underlying operating profit margin of 15%, cash conversion greater than 90%, a return on capital employed over 20%, and delivery of SBTi-validated emissions targets by 2028.

Current trading for the two months to the end of May showed a 2.2% increase in group revenue on a constant currency like-for-like basis, adjusting for Johnson Tiles UK and Norcros Adhesives.

However, reported group revenue was 2.9% below the prior year.

“I am delighted with the performance over this period and excited by the significant opportunities that remain in the more resilient mid-premium market segments that we hold leading positions in,” said chief executive officer Thomas Willcocks.

“Our strategy is building from a position of strength and scale as we actively leverage the customer and operational synergies within the group.”

At 1046 BST, shares in Norcros were up 0.48% at 208p.

Reporting by Josh White for Sharecast.com.