Earnings-enhancing Fibo deal completes
In a strong strategic move, Norcros has announced the completion of the Fibo Holding AS acquisition first announced in July. It enhances the company’s existing stable of brands in a higher growth segment and brings group exposure to adjacent markets, most notably Scandinavia. On our estimates, the deal enhances earnings by 13-14% in a full year, along with new market opportunities for existing operations.The acquisition of Fibo completed on 13 October following unconditional clearance from the UK CMA. Fibo is a well-invested company with leading market positions in its primary Scandinavian markets (ie its native Norway plus Sweden). It expands Norcros’ position in the wall covering market, bringing a second waterproof wall panel brand - complementary to Grant Westfield – plus product core and end market diversity.
In the year to December 2024, Fibo reported revenue of £63m with an EBITDA margin of 11.3%. Trading thus far in FY25 has been positive at the headline level with revenue and EBITDA up by 7.2% and 28.7% respectively. Norcros is paying £46m out of existing banking facilities and management expects end FY26 leverage to be in the order of 1.6x. In our updated estimates, we have factored in 2-3% revenue growth and EBIT margins of 13%.
We shall review our existing 300p per share fair value with the H1’26 results - but note that only a modest increase on our FY28E EBITDA subsequently is required to justify this level on a DCF basis.
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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