Norcros (NXR) delivered a robust first-half performance, with tough trading in the UK countered by strong growth in the South African operation. Norcros was affected by weak consumer confidence at home and a certain amount of destocking by retailers. On a like-for-like basis revenue fell by 5 per cent, although adding in recent acquisitions Abode and Croydex overall turnover was up by 9 per cent.
Among its leading brands, Triton Showers saw revenue down by 14.2 per cent, while Johnson Tiles reported revenue 9 per cent down. Demand in the DIY market was said to be subdued after the Brexit vote, and some retailers were choosing to import tiles directly themselves. In South Africa, revenue grew by 8 per cent in sterling terms, led by strong growth at Tile Africa. Underlying operating profits jumped by 57.9 per cent.
Lower bond yields pushed the pension fund deficit up from £55.7m in March to £97.8m, but with bond yields at historic lows and with distributable reserves in excess of £100m, Norcros stressed that the dividend payment is not under threat. As part of a recovery plan, it will pay £2.5m a year, inflation adjusted, into the fund.
Analysts at Numis are forecasting pre-tax profits for the year to March 2017 of £22.3m and EPS of 27p (from £20.4m/27.8p in FY2016).
| NORCROS (NXR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 146p | MARKET VALUE: | £ 89m | |
| TOUCH: | 146-149p | 12-MONTH HIGH: | 208p | LOW: 137p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 37p* | NET DEBT: | 122% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 119 | 7.0 | 9.0 | 2.2 |
| 2016 | 129 | 7.7 | 10.0 | 2.4 |
| % change | +9 | +10 | +11 | +9 |
Ex-div:15 Dec Payment:12 Jan *Including intangible assets of £45m or 73p a share | ||||
