Clear progress evident, and more to come
FY24 results clearly showed that UK portfolio management is already starting to bear fruit and collaborative actions taken should support further margin progress in due course. Our fair value, other peer group metrics and strategic earnings potential all suggest a share price above current levels.Revenue and EBIT came in just above indications in the pre-close update led by a firmer outturn from UK/Ireland operations. Reported EBIT margins were 13.6% in the UK (+100bp yoy), 4.4% in South Africa (-260bp) and 11.0% at group level (+30bp). UK and group operating margins for continuing operations in FY24 were 15.0% and 11.8% respectively. DPS was held at FY23 level and year end net debt (pre IFRS16) basis was in line at c.£37m after strong H2 cash inflow.
FY25 has started positively for Norcros suggesting outperformance in markets where wider commentary remains generally cautious. GDP forecasts for both of Norcros’ primary countries of operations show modest expected growth and we have made no material changes to our underlying revenue and EBIT expectations, save for adjusting to prevailing £/ZAR rates.
Our fair value adjusts to 253.5p per share, down slightly due to peer group comparator effects. The previous analysis of group strategy and potential earnings implications is unchanged, with a prospective valuation in excess of 400p per share.
Norcros Plc is a holding company for the Norcros Group. The Company's principal activities include development, manufacture and marketing of home consumer products in the United Kingdom and South Africa. The Company's segments include UK and South Africa. The Company has six United Kingdom businesses, including Triton Showers, Vado, Croydex, Abode, Johnson Tiles and Norcros Adhesives, and three businesses in South Africa, including Johnson Tiles South Africa, TAL and Tile Africa. The Company is focused on showers, taps, bathroom accessories, tiles and adhesives. In the United Kingdom, the Company offers a range of bathroom and kitchen products both for domestic and commercial applications. The Company offers mixer showers and accessories; tile and stone adhesives; taps, bathroom accessories and valves; bathroom furnishings; ceramic wall and floor tiles; kitchen sinks; tile adhesives, pourable floor coverings and tiling tools through its United Kingdom and South Africa business.
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