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.
The UK’s new build housing market is subdued following the interest rate increases, although the repair, maintenance and improvement market has been more robust. In South Africa, demand across the board has been affected by the ongoing power disruption issues, which are likely to remain a feature.
Industrials |
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Industrials |
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Industrials |
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Industrials |
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James Eyre
CFO
Thomas Willcocks
CEO
Forecast net debt (£m)
40
Forecast gearing ratio (%)
18
% | 1M | 3M | 12M |
---|---|---|---|
Actual | 3.8 | 0.0 | 2.7 |
Relative | 3.4 | (0.1) | (1.8) |
52 week high/low | 195.0p/135.5p |
Norcros’s H124 total revenue fell 8.3% on a reported basis, but declined only 4.1% on a constant currency basis, reflecting tough UK market conditions and power outages in South Africa. Underlying operating profit declined just 2.7%. The company’s market leading businesses, brands and superior service offering allowed it to unlock market share opportunities that offset weaker markets. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying upside of c 35%.
Y/E Mar | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (fd) (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 396.3 | 47.0 | 38.6 | 37.99 | 5.0 | 3.2 |
2023A | 441.0 | 52.3 | 41.5 | 40.89 | 4.6 | 3.2 |
2024E | 411.7 | 49.3 | 35.3 | 30.00 | 6.3 | 3.4 |
2025E | 412.0 | 49.8 | 36.5 | 30.92 | 6.1 | 3.4 |