18th Jun 2015 09:42
LONDON (Alliance News) - Norcros PLC shares were higher Thursday after it reported higher profits for its last financial year, driven by an improvement in its South African businesses, particularly Johnson Tiles, and said it expects further progress this year.
The supplier of branded showers, taps, bathroom accessories, tiles and adhesives in the UK and South Africa reported a closely-watched operating profit excluding acquisition and exceptional costs of GBP17.0 million for the year to March 31, up from GBP16.1 million a year earlier, as revenue grew to GBP222.1 million from GBP218.7 million and operating margins improved in South Africa.
Its pretax profit rose to GBP11.0 million, from GBP5.8 million a year earlier when it had booked net finance costs of GBP7.0 million due to fair value movements on foreign exchange contracts.
Norcros raised its dividend for the year to 0.56 pence, from 0.51p, as underlying operating cash flow rose to GBP22.9 million from GBP20.3 million and underlying return on capital employed hit 16.3%, above its strategic target of between 12% and 15%. Net debt was cut to GBP14.2 million from GBP26.9 million, as it sold surplus property and its Johnson Tiles Australia business.
"I am delighted that Norcros has recorded another year of revenue and underlying operating profit growth, a feat that the group has now achieved for six consecutive years. I am especially pleased that we have achieved an underlying ROCE of 16.3% in the year, ahead of our strategic target of 12-15%, reflecting continued improvements in our operational performance, and the benefit of disposing of the non-core assets. I believe the group is very well placed to build on the excellent progress achieved this year, and underpinned by our strong brands and leading market positions, I look forward to the future with optimism," Chairman Martin Towers said.
The maker of Triton showers performed better in South Africa thant in the UK.
It said the UK retail sector remained challenging, and overall UK revenue grew just 0.7% to GBP149.1 million, while underlying operating profit fell to GBP13.8 million from GBP14.2 million as operating margins fell. John Tiles was the weakest performer in the UK.
"Increasing UK commercial and domestic construction activity has driven growth in the UK trade and specification markets and we continue to grow strongly in this sector. The UK retail sector has been very mixed but improving trends in consumer confidence and forecast growth in RMI expenditure are both encouraging," it said in its outlook statement.
In South Africa, meanwhile, revenue rose 15.1% at constant currencies, while underlying operatinf profit rose to GBP3.2 million, from GBP1.9 million despite the weaker rand.
"In Johnson Tiles South Africa, exciting new product ranges have gained good market acceptance following the successful installation of our second inkjet printer, and together with continued manufacturing efficiency improvements, enabled the business to break even in the year, a significant improvement on last year," it said.
"Notwithstanding the short term challenges, the medium-term outlook in South Africa remains positive and the strong revenue and self-help momentum in our South African businesses should ensure we will make further progress in this year," it added.
Norcros shares were up 2.9% at 18.00 pence Thursday morning, one of the best-performing stocks in London's Main market.
By Steve McGrath; [email protected]; @stevemcgrath1
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