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Victoria grows scale, looks to margins

The flooring specialist has made a number of acquisitions in recent years
November 29, 2017

Flooring manufacturer Victoria’s (VCP) growth strategy relies on building scale through acquisitions, then using that scale to drive down costs. This has led to large jumps in sales in recent years, and these latest numbers are no different.

IC TIP: Buy at 817.5p

The group is looking to improve margins, and in June this year announced a reorganisation of its UK manufacturing and logistics businesses. In the first half, £1.84m was spent on the effort, with the group reporting it has completed its work on the manufacturing operations and plans to fully implement the logistics changes during the 2019 financial year.

Exceptional items related to acquisitions and the reorganisation suppressed statutory numbers, but on an underlying basis cash profit was up 22 per cent for the 26 weeks to 30 September, compared with the same period last year.

The group’s performance is also reassuringly broad based, with the UK & Europe and Australian businesses generating revenue growth of 17 per cent and 42 per cent, respectively.

Analysts at Cantor Fitzgerald are forecasting rapid growth in earnings, with pre-tax profit of £39.5m and EPS of 30p in the year to March 2018, rising to £70.8m and 46.3p in FY2019 (from £29.4m and 24.4p in FY2017).

VICTORIA (VCP)   
ORD PRICE:818pMARKET VALUE:£932m
TOUCH:810-825p12-MONTH HIGH:860pLOW: 326p
DIVIDEND YIELD:naPE RATIO:59
NET ASSET VALUE:76p*NET DEBT:115%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20161538.46.57nil
20171898.86.55nil
% change+24+5-0-
Ex-div:na   
Payment:na   
*Includes intangible assets of £121m, or 106p a share