Norcros Plc (LSE:NXR) has a well established, successful track record of serving consumers, architects, designers, developers, retailers and wholesalers. The company's emphasis is on strong branding, contemporary designs, trusted quality, outstanding service, innovation and breadth of range. The company base its business on understanding its customers’ needs. Norcros is a substantial group with consistent, high quality standards and considerable resources. The company invest significantly and continuously in its people, brands, product development and processes and the company aim to develop its business in both the quality of its products and the scale of its activities.1

Norcros plc floated on the London Stock Exchange on 16 July 2007. The Group had previously been listed on the LSE until 1999, when it was subject to a management buyout. Until that point the Group had a number of subsidiary undertakings in the home consumer products and speciality chemicals sectors. During its period as a private company (1999–2007), the Group focused on its home consumer products following a number of strategic disposals and investment in its remaining businesses. The result was to form the shape of the business as it is today. The Board decided to return to the stock market in 2007 to provide access to new capital to fund further growth in its now clearly defined markets.2


Organic growth will continue to be driven by capitalising on its leading market positions in the UK and South Africa. The company's strategic initiatives will ensure the company maintain the provision of innovative new product programmes, excellent customer service and investment in its brand portfolio. The company will also reinforce its “designed in Britain” credentials as well as capture the growth opportunities in South Africa, Sub-Saharan Africa and the Middle East, where medium-term growth rates are likely to be higher than those in the more developed markets.3

Acquisitions will be targeted at complementary market and industry segments exhibiting attractive returns on capital which are likely to be in bathroom and kitchen products with exposure to commercial and specification segments. The successful acquisitions of Vado, Croydex, Abode and most recently of Merlyn in November 2017 all demonstrate the execution of its strategy. The addition of House of Plumbing to the portfolio will help drive further progress.

Strategic targets:

  • Grow Group revenue to £600m by 2023
  • Maintain approximately 50% of Group revenue derived outside the UK
  • Achieve a sustainable underlying return on capital employed of above 15% through the economic cycle

Geographic areas

The company organise its Group into two geographic areas: the UK and South Africa. This gives it a combination of well established businesses with strong market positions and growth opportunities in new markets.

United Kingdom

The company operate through seven complementary and market leading businesses with strong brands: Triton Showers, Merlyn, Vado, Croydex, Abode, Johnson Tiles, Norcros Adhesives.4

South Africa

Norcros is a leading manufacturer of ceramic tiles and adhesives and a leading retailer of these and associated products, such as sanitaryware, under the Tile Africa, Johnson Tiles South Africa, TAL and House of Plumbing brands.5

Financial overview

Group revenue for the year ended 31, March 2019 was £331.0m, 10.3% higher than the prior year on a reported basis, 11.6% higher on a constant currency basis and 2.3% higher on a like for like constant currency basis. Underlying operating profit at £34.4m was 25.5% higher than the prior year, mainly reflecting the full-year contribution from Merlyn, the return to profitability of Johnson Tiles UK after the restructuring implemented in April 2018 and the strong performance at Triton. This has resulted in a 7.5% increase in underlying diluted earnings per share to 31.7p (2018: 29.5p)6

Group underlying operating profit at £34.4m (2018: £27.4m) was 25.5% higher than the prior year, with Group underlying operating margins increasing to 10.4% (2018: 9.1%). Underlying operating cash flow improved by 28.4% to £39.8m (2018: £31.0m) reflecting the improved underlying operating profit and continued focus on working capital management. The Group has a strong balance sheet with net debt of £35.0m (2018: £47.1m), and leverage of 0.8 times underlying EBITDA (2018: pro forma 1.2 times).

Acquisition of House of Plumbing

The Group announced on 16 January 2019 its acquisition in South Africa of the House of Plumbing business which completed on 1 April 2019 for a total consideration of up to ZAR 215m (approximately £12.1m). The acquisition, funded entirely from local cash resources and existing facilities, is a further step in the Group’s strategy to expand its bathroom product portfolio and follows on from a number of successful acquisitions, most recently that of Merlyn, which performed strongly in the year. House of Plumbing offers a range of complementary products and further reinforces the Group’s strong positions in the commercial and specification segments of the market and will benefit from the additional distribution channels, procurement experience and strong financial position of the enlarged Group.

United Kingdom

Revenue in the UK was £228.1m for the year (2018: £200.6m) up 13.7% on prior year principally reflecting the full year contribution from Merlyn which has continued to perform strongly since acquisition. On a like for like basis UK revenue was broadly flat across the year having been 4.1% lower in the first half, recovering strongly with a 3.8% increase in the second half. The weaker first-half was largely due to significantly lower retail revenue at Johnson Tiles UK, which was anticipated and mainly due to the Kingfisher unified programme. Johnson Tiles apart, second half UK like for like revenue increased by 5.0% compared to an increase of 2.5% in the first half on the same basis. The second half on the same basis. The strong second half growth was driven by market share gains as new range listings were secured benefiting from access to the Group’s extensive customer base and its strong financial position.

UK underlying operating profit for the year was 42.5% higher than the prior year at £26.5m (2018: £18.6m) with an underlying operating margin of 11.6% (2018: 9.3%). The improvement in profit and margin in the year mainly reflected the full year contribution from Merlyn, the return to profitability of Johnson Tiles after the successful execution of the restructuring programme and the strong performance at Triton.

South Africa

The company's South African business again delivered strong revenue growth despite a challenging market and an uncertain political environment. Revenue in South Africa of £102.9m (2018: £99.5m) was 7.2% higher than the prior year on a constant currency basis and 3.4% higher on a reported basis, continuing the strong outperformance of recent years. In Johnson Tiles SA revenue growth was driven by the focus on the independent customer base and the strong new product programme supported by the increase in manufacturing capacity. In TAL, developments in its flooring ranges and preferred partner status in construction projects led to growth ahead of the market. In Tile Africa, revenue growth benefited from the excellent progress made in the bathroom and tap category, driven in part by access to the wider-group supply chain, and also growth in the specification channel due to the “one-stop-shop” business model that has been implemented.

South African underlying operating profit for the year was, however, 10.2% lower at £7.9m (2018: £8.8m) including a £0.4m adverse impact from a weaker Rand. Underlying profitability and return on sales at 7.7% (2018: 8.8%) were lower than prior year reflecting the impact of a planned and non-comparable plant shutdown at Johnson Tiles South Africa to effect the plant capacity increase in the first half of the year, competitive pricing pressures on some volume lines and power rationing that impacted production and revenue in the final quarter of the year.

Recent presentation and interview




  1. ^ https://www.norcros.com/about-us/our-business/
  2. ^ https://www.norcros.com/about-us/our-history/
  3. ^ https://www.norcros.com/about-us/our-strategy/
  4. ^ https://www.norcros.com/our-businesses/united-kingdom/
  5. ^ https://www.norcros.com/our-businesses/south-africa/
  6. ^ https://www.norcros.com/files/1415/6095/1917/Norcros_plc_Annual_report_and_accounts_2019.pdf
Tags: UK:NXR
Created by Asif Farooqui on 2020/03/18 07:26
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