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New broom at Victoria

RESULTS: Struggling carpet maker Victoria is under new management - but turning the group around could take time
December 3, 2012

Carpet maker Victoria faces "real challenges" says its new chairman, Geoff Wilding. Mr Wilding, who took over from former chair Katherine Innes Ker in October following a boardroom coup, says his priority is to cut costs at the UK operation.

IC TIP: Hold at 197.5p

The problem is that Victoria (VCP) can no longer rely on a profitable Australian operation to shield its UK businesses - which are loss-making. That's because the Australian operations are now under pressure and half-year operating profit there slumped to £752,000 from last year's £2.03m. That leaves pressure mounting on the UK operations to begin pulling their own weight. It's a transformation that won't be easy. Indeed, Mr Wilding believes the UK business has twice as much manufacturing capacity as it needs in an industry that's already loaded with excess capacity and faces a considerable stock over-supply. Not all of the painful loss, however, reflects poor trading. Victoria was also hit with exceptional costs of £1.46m - which included a £177,000 cost from a proposed move to the Alternative Investment Market, a £144,000 cost for a proposed remuneration scheme that was eventually dropped, and an £860,000 restructuring cost for the Australian spinning mills.

Broker Seymour Pierce expects full-year pre-tax loss of £0.5m and has cut its 2014 profit estimate from £2.5m to £0.5m.

VICTORIA (VCP)

ORD PRICE:197.5pMARKET VALUE:£13.9m
TOUCH:195-200p12-MONTH HIGH:382.5pLOW: 197.5p
DIVIDEND YIELD:4.6%PE RATIO:na
NET ASSET VALUE: 548pNET DEBT:22%

Half-yearto 29 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201139.01.2711.63.5
201236.0-1.53-15.82.0
% change-8---43

Ex-div: 5 Dec

Payment: 20 Dec