Shares in Norcros (NXR) rose nearly 8 per cent after the bathroom accessories, tiles and adhesives supplier delivered a strong first-half performance and forecast that full-year numbers would be ahead of market expectations. Accordingly, analysts at Numis upgraded their forecasts by 4 per cent for the year to March 2016, and now expect pre-tax profits of £19.8m and EPS of 23.9p (from £15.8m and 21.1p in FY2015).
Underlying operating profits rose by a third to £9.9m, while margins rose from 6.8 per cent to 8.3 per cent. Trading in the UK was lifted by a return to profitability at Johnson Tiles, in the wake of an improvement in manufacturing efficiency. There was also a three-month contribution from recently acquired Croydex, a specialist in bathroom furnishings. The acquisition is seen as the next step in the group's strategy to increase revenue to £420m by 2018.
Trading in the South African business produced an encouraging 17 per cent increase in revenue, although this growth was halved in sterling terms because of the weak rand. Even so, underlying profits jumped 90 per cent to £1.9m despite a £100,000 adverse currency swing. Net debt almost doubled to £29.2m after the Croydex acquisition, but cash conversion remained strong at 104 per cent of underlying cash profits.
| NORCROS (NXR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 193.5p | MARKET VALUE: | £118m | |
| TOUCH: | 192-194.5p | 12-MONTH HIGH: | 228p | LOW: 150p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 86p* | NET DEBT: | 56% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p)** |
|---|---|---|---|---|
| 2014 | 109 | 6.3 | 8.0 | 1.85 |
| 2015 | 119 | 7.0 | 9.0 | 2.2 |
| % change | +9 | +11 | +13 | +19 |
Ex-div: 3 Dec Payment: 7 Jan *Includes intangible assets of £42m or 68p a share **Adjusted for 1-for-10 share consolidation in September 2015 | ||||
