13th Nov 2014 12:14
LONDON (Alliance News) - Norcros PLC Thursday reported higher pretax profit for the first half of the year, despite revenue being hit by weakness of the South African rand against the pound.
The supplier of branded showers, taps, bathroom accessories, tiles and adhesives posted pretax profit of GBP6.7 million for the 26 weeks to September 30, up from only GBP0.3 million a year earlier, after last year's first-half profit was hit by a number of one-off charges.
Excluding one-off operating costs and non-cash finance expenses, pretax profit came in at GBP6.7 million, compared with GBP5.9 million the prior year.
The growth in profits was in spite of the weak rand, which meant its reported revenue for the period was down 2.3% to GBP108.6 million, against the GBP111.2 million last year, as strong growth in the UK trade sector offset a subdued performance from the UK retail sector and export markets. On a constant currency basis, the company said revenue grew 3.3% year-on-year.
"UK construction activity and an improving UK housing market continue to drive the UK trade sector recovery, and we have seen strong evidence of this across all our UK businesses. However, the UK retail sector remains subdued with consumer confidence still weak. Conditions in our South African markets have remained challenging, but despite this our businesses have performed strongly, gained market share and delivered 11% constant currency revenue growth," said Chairman Martin Towers in a statement.
Norcros said that assuming no further devaluation of the rand in the remainder of the year, strong constant currency growth should start to convert to sterling growth in the second half of the year.
"With our strong brands, leading market positions and continued self-help initiatives focused on market share gain, the board remains confident that the group should continue to make progress in line with market expectations for the year to 31 March 2015," he added.
The company increased its interim profit by 8.8% to 0.185 pence per share.
Norcros said it reduced its net debt during the period by GBP6.9 million to GBP20.0 million, driven by good working capital control as well as GBP3.8 million in net proceeds from the sale of its Australian tiles business back in May.
"Further progress has been made on our legacy leases with the lease exit and freehold acquisition at Sheffield for GBP3.4 million. With the end of the lease at Drakes Way, Swindon in December 2014, the group is nearing an end to its legacy lease cash outflows," it said.
Norcros shares were trading 0.4% higher midday Thursday at 15.81 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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