FY19 has started well for Norcros Plc (LON:NXR) and management expectations for full-year progress are unchanged. The maiden Q1 contribution from Merlyn has more than offset Johnson Tiles’ (JT’s) revenue reduction and other operations collectively continue to show good growth. As before, we maintain that a positive re-rating is likely.
UK operations mostly outperforming
Excluding Merlyn and JT, l-f-l revenue growth from the bulk of the UK operating base (ie companies accounting for c 70% of FY18 sales) was +5.2% in Q1. This was sequentially below that seen in the prior year but against comments elsewhere in the UK RMI space (eg ERA/Tyman, Kingfisher/B&Q) it represents a strong relative performance. As previously flagged, JT has lost share at B&Q following supplier consolidation and, until the annual effect works through in H219, this will dilute overall UK l-f-l revenue development. JT has substantially implemented a cost-reduction plan to counter this effect. More positively, Merlyn (acquired in November) appears to have bedded in well to the Norcros portfolio, having performed ‘strongly’ in the year to date.
To read the entire report Please click on the pdf File Below: