Norcros annual revenues rise despite exceptional charges

Bathroom accessories company Norcros on Thursday said it expects annual revenues and profits to rise following sales growth in the UK and South Africa.

Bathroom accessories company Norcros on Thursday said it expects annual revenues and profits to rise following sales growth in the UK and South Africa.

The group anticipates revenue for the year ended March 31st 2013 to come to £210m, a 5.0% increase on the previous year's £200.3m.

Underlying operating profits is forecast to rise 7.4% to £13m while pre-tax profits are pegged to climb 9.3% to £11.7m.

The UK business flew in the face of tough market with a year-on-year revenue growth of 5.0%. A 4.5% decline in revenue of the Triton shower products was offset by a strong performance of Johnson Tiles and Norcros Adhesives.

In South Africa, the company thrived with revenues up 19% on a constant currency basis. The manufacturing performance of the Johnson Tiles South Africa business improved but a rise in energy prices limited margin benefits.

During the year, the firm acquired Eurobath International, trading as Vado, which manufactures taps, mixer showers, bathroom accessories and valves.

The board said it expects Vado to be "earnings enhancing immediately". Vado reported 2012 revenue of £25.6m, earnings before interest, tax, depreciation and amortisation (EBITDA) of £2.5m, and profit before tax of £2.1m.

As a result of the costs of the acquisition, Norcros' closing net debt is anticipated to rise to £31.0m from £17.8m the previous year.

Norcros has also received a planning consent for the proposed development at Highgate Park, Tunstall, which will include a food store and petrol station.

The deal is subject to a conditional sale contract with Optimisation Developments, a subsidiary of Morrison Supermarkets for gross proceeds of £8.25m and net proceeds of £2.6m.

It is expected that the sale contract with Morrisons will become unconditional by the end of July 2013.

The group said an exceptional charge of £3.0m will affect profits, as three property lase remain vacant despite significant marketing efforts.

"The recent weakness of sterling and rising energy costs have added to the already challenging outlook for our UK and South African markets," the firm said in a statement.

"Nonetheless, our businesses have demonstrated their resilience and ability to gain market share. With the acquisition of the Vado business combined with the ongoing programme of growth initiatives and self-help actions, the board remains confident that Norcros will continue to make further progress."

Shares fell 5.63% to 16.75p at 10:20 Thursday.

RD

Recommended

Royal Mail will deliver for investors – here's how to play it
Trading

Royal Mail will deliver for investors – here's how to play it

Royal Mail Group has found its feet in the past 18 months and looks cheap. Matthew Partridge looks at how to trade the shares.
14 Sep 2021
The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Three hidden gems from Japan’s overlooked stockmarket
Share tips

Three hidden gems from Japan’s overlooked stockmarket

Professional investor Eiji Saito of JPMorgan’s Japan Small Cap Growth & Income fund picks three promising stocks from Japan's vibrant but under-resear…
13 Sep 2021
Share tips of the week – 10 September
Share tips

Share tips of the week – 10 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
10 Sep 2021

Most Popular

Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
How you can profit from the power of the grey pound
Share tips

How you can profit from the power of the grey pound

Higher life expectancy and surging asset prices have proved a boon for the baby-boomer generation, which has accumulated vast wealth. Younger generati…
10 Sep 2021