Join our community of smart investors

Norcros organic growth slows

The bathroom and kitchen products supplier flagged challenging conditions in the UK and South Africa
November 14, 2019

Customer restructuring programmes and a tough macroeconomic backdrop in South Africa meant Norcros (NXR) managed just 0.9 per cent like-for-like revenue growth at constant currencies during the first half of its financial year. Investors in the bathroom and kitchen product supplier have known better momentum.

IC TIP: Hold at 234p

Shower manufacturer Triton - the largest contributor to UK revenue - reported a 12.3 per cent decline in like-for-like revenue as major customers de-stocked as part of plans to de-merge their UK operations. The industry-wide trend also caused a reduction in trade revenue for shower enclosure and tray supplier Merlyn. However, the latter division was helped by the roll-out of new product lines, which boosted the business’s retail revenue. Tap designer and manufacturer Abode also put in a stronger showing, selling £8.6m-worth of product, up from £7.3m a year ago.

South African revenue was flat on an underlying basis, despite Johnson Tiles being boosted by additional capacity and plant improvements. The April acquisition of House of Plumbing contributed £13m in revenue, 1 per cent higher than in the prior period. 

Analysts at Peel Hunt expect adjusted pre-tax profits of £36.3m and EPS of 34.9p for the year to March 2020, rising to £38m and 36.5p, respectively, at the same time in 2021.

NORCROS (NXR)    
ORD PRICE:234pMARKET VALUE:£188m
TOUCH:226-238p12-MONTH HIGH:245pLOW: 183p
DIVIDEND YIELD:3.7%PE RATIO:11
NET ASSET VALUE:166p*NET DEBT:31%**
27 weeks to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2018†16315.115.12.8
201918112.712.53.1
% change+11-16-17+11
Ex-div:28 Nov   
Payment:10 Jan   
*Includes intangible assets of £100m, or 125p a share. **Excludes lease liabilities. †26-week period.