Having operations covering two hemispheres is good news for carpet maker Victoria because when one is down, the other can still perform strongly. A few years ago, UK carpet manufacturing was booming, but times were hard in Australia. Now the tables are turned, as Britain slips into possible recession, the Aussies have become big spenders on the back of the commodities boom.
In fact, Victoria still managed to do well last year despite a “very challenging” home market: UK sales rose 6 per cent to £25.5m, despite overall carpet demand falling by around 5 per cent; operating profits were 10 per cent higher at £1.34m.
But these figures were eclipsed by the boom times down under. Sales rose £4.77m to £28.5m - at 46 per cent, the highest-ever percentage of overall group revenues - while operating profits jumped by almost £1m to £3.05m. And this trend is likely to continue as Victoria is investing a further £3.9m in Australia this year to increase tufted carpet capacity by 30 per cent to meet demand. Last year’s total spend on plant was around £1.8m. The Australian performance has also reduced year-end net debt and added to an already strong property-backed balance sheet.
Broker Arden, has increased its 2008-09 profits target by £200,000 to £3.8m to produce EPS of 38.9p. To add some zip to sales in the UK, Victoria is moving into contract carpets, while a chemical-free eco-friendly carpet makes its entrance later this year.
VICTORIA (VCP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 262.5p | MARKET VALUE: | £18.2m | |
| TOUCH: | 255-270p | 12-MONTH HIGH: | 324p | LOW: 228.5p |
| DIVIDEND YIELD: | 5% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 469p | NET DEBT: | 23% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 54.6 | 4.17 | 43.3 | 11.5 |
| 2005 | 53.2 | 1.17 | 12.1 | 11.5 |
| 2006 | 52.3 | 1.94 | 23.3 | 11.5 |
| 2007 | 55.4 | 2.76 | 28.9 | 12.5 |
| 2008 | 61.7 | 3.51 | 36.5 | 14.0 |
| % change | +11 | +27 | +26 | +12 |
Ex-div: 25 Jun Payment: 28 Jul | ||||
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