22nd Nov 2016 10:05
LONDON (Alliance News) - Victoria PLC on Tuesday said its pretax profit more than doubled year-on-year in its first half, noting that the prices at which carpets are sold is governed more by the price point of competitors than consumer expectations.
Flooring manufacturer and distributor Victoria said the two markets in which it trades, Australia and the UK, continued to perform well in the six months ended October 1.
In its Australian operations, the market is experiencing "very good demand from consumers", Victoria said, noting that although the housing stock in the country is about a third of that in the UK, the houses are around three times the size of average UK houses. On a like-for-like basis, revenue in Australia was in 8.9% in the period.
Meanwhile, "despite the prognostications of the doom-sayers, Brexit has had no discernible impact on demand" for its products in the UK, Victoria said, with like-for-like revenue up 3.5% in the period.
UK operations account for around 75% of Victoria's business. It sells through 13 businesses in the country, including Munster Carpets Ltd, Interfloor Ltd and Whitestone Weavers Ltd.
Victoria said around 60% of carpets sold in the UK are imported, mainly from Europe, so the weaker pound has helps the group by making its main competitor's products materially more expensive. By contrast, Victoria said less 20% of its cost base is denominated in euros or dollars.
For the six month period, group revenue grew 45% to GBP153.4 million from GBP105.6 million, driving pretax profit to more than double to GBP8.4 million from GBP3.9 million.
The flooring manufacturer signalled that, unlike other retail purchases, consumers "typically only decide to invest in a new carpet for their home once every seven to nine years", and have "little awareness as to what a square metre of carpet 'should' cost".
"It is for that reason that the price at which we can sell product is governed by the price point of our competitors than consumers expectations. This, therefore, makes it easier to pass on any production-based inflationary pressures due to all manufacturers broadly being in the same position; all seeking to increase prices at similar inflection point," Victoria said.
Despite this, Victoria noted that it was maintaining a tight control over costs and inventory should selling conditions change.
Shares in Victoria were up 1.0% at 299.40 pence on Tuesday.
By Hannah Boland; [email protected]; @Hannaheboland
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