£190.7m market cap

237p last close

Norcros is a leading supplier of showers, enclosures and trays, tiles, taps and related fittings and accessories for bathrooms, kitchens, washrooms and other commercial environments. It has operations in the UK and South Africa, with some export activity from both countries.

Investment summary

The pre-close update (17 October) noted H120 underlying revenues +1.3% y-o-y in the UK and flat in South Africa (vs -0.4% and +0.8% respectively at the end of Q1). UK progress was all organic and comprised domestic growth of 3.4% and, after a relatively weak start to the year, an improved UK export performance in Q2 though it is still lagging prior year levels. Conditions in South Africa remain challenging so at face value underlying revenue vs H119 looks creditable. Initial integration steps for House of Plumbing (acquired in April) have been completed and its inorganic revenue contribution in the first six months was c ZAR225m/£12m. Flagged period end group net debt of c £42m infers a small underlying cash inflow in H1 (prior to the acquisition). H120 results are due 14 November.

Y/E Mar
Revenue (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2018A 300.1 34.7 24.4 26.8 8.8 6.9
2019A 331.0 42.2 30.9 29.6 8.0 5.4
2020E 359.9 46.3 34.0 32.0 7.4 5.5
2021E 368.4 48.3 35.9 33.5 7.1 4.4
Industry outlook

In the UK, the residential new-build sector has performed well and there is impetus for this to continue. RMI spending has not recovered at the same rate. The South African economy is currently facing a number of challenges; wider distribution of wealth and an emerging middle class should benefit consumer spending over time. Norcros’s management has set new 2023 financial targets for the group: to attain £600m revenue with a balanced UK/overseas split and to sustain a ROCE of 15%+.

Last updated on 14/11/2019
Share price graph
Balance sheet
Forecast net debt (£m) 36.2
Forecast gearing ratio (%) 26
Price performance
Actual 6.8 8.7 4.9
Relative* 5.5 5.6 0.7
52-week high/low 243.0p/185.5p
*% relative to local index
Key management
Nick Kelsall CEO
Shaun Smith CFO

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