Norcros' (LON:NXR) H118 pre close update flagged group revenue and EBIT in line with management’s full year growth expectations. The period end net debt figure – after some exceptional costs – was also where we expected it to be. Both divisions are achieving good revenue growth without much help from their respective markets and profitability should follow. The rating is yet to give credit for the achievement of this self-generated progress.
Good y-o-y gains seen in the UK
Weak prior year comparatives helped FY18 to get off to a very encouraging start. Year-on-year UK revenue growth figures are expected to taper down as these effects work through and Q118 +10.9%, H118 +8.4% reflect this. Markets overall remain competitive; sector trends appear to be as before with trade/new housebuilding firm, retail subdued and export momentum improving. Individual company performance reflects channel exposure but selective market share gains are also being achieved. Earlier price increases have held and, taken together, the headline revenue progress looks to be fairly broadly based though we do expect to see variation in operating company performance when the H1 results are announced. The operational changes at Johnson Tiles (re-configuring the second kiln, having mothballed the third) are proceeding to plan.
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