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Norcros continues to battle forex headwinds

By BFN News | 07:45 AM | Wednesday 23 July, 2014


Norcros said group revenue from continuing operations for the 13 week period to June 29 was 0.9% higher on a constant currency basis compared to the same period last year but 5.7% lower in Sterling reflecting a weaker South African Rand. The company -- a supplier of innovative branded showers, taps, bathroom accessories, tiles and adhesives -- said the economic outlook in the UK continues to be positive in terms of construction activity and housing transactions benefitting the trade sector. "As reported previously, the UK retail sector is taking longer to recover and still remains challenging. Whilst the medium term outlook in South Africa is still positive, the weak Rand continues to have an adverse effect on Rand profit translation to Sterling," Norcros said. "Nevertheless, given the continuing improvement in the financial performance of our UK and South African tile businesses and the expected recovery in Vado export revenues as commercial projects complete, the Board remains confident that the Group should continue to make progress in line with market expectations for the current year." Norcros said market conditions remain mixed for our UK businesses. Revenue from the UK market was 1.4% higher than the same period last year with continued growth in the trade sector of 4.2% but with the retail sector 3.7% lower," Norcros said in a statement. "Export revenue was however 13.2% lower reflecting the timing of commercial projects in Vado outweighing good export growth in Triton. This left total revenue from our UK businesses for the 13 week period 1.6% lower than the same period last year. "Revenue at Triton for the 13 week period was 2.6% lower than the same period last year. UK revenue was 6.9% lower with revenue from the trade sector 13.8% lower due to destocking and internal restructuring in the national merchants. "Retail sector revenue was 5.3% lower albeit improving through the 13 week period. Export revenue, which is predominantly derived from Ireland and accounts for 19% of overall Triton revenue, performed well in the period growing 21.3%. "Vado continued its strong UK revenue growth for the 13 week period at 18.5% ahead of last year but was offset by export revenue 35% lower, reflecting commercial project timing and distributor destocking in the Middle East which is expected to correct in the balance of the financial year. This left total revenue for the 13 week period 6.4% lower than last year. "Revenue at Johnson Tiles for the 13 week period was 0.9% lower than the same period last year. UK trade revenue continued to improve, being 11.8% higher. However, UK retail revenue declined 8.7% in the 13 week period reflecting weak sales out across the sector. This left overall UK revenue broadly in line with last year. Export revenue was 1.5% lower than the same period last year. The cost base restructuring implemented in the second quarter last year has ensured that profitability has materially improved over the same period last year. "Revenue from our South African businesses grew by 6.2% on a constant currency basis, but a weaker Rand saw Sterling reported revenue 13.1% lower than the same period last year. Tile Africa experienced particularly strong constant currency growth at 12.1% and Johnson Tiles South Africa continued to make good progress towards profitability." Norcros has entered into a new committed £70m unsecured revolving credit facility and a £30m accordion facility through to July 2019 with three banks. Story provided by StockMarketWire.com

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