Ticker: NXR Exchange: LSE

Norcros is a leading supplier of bathroom and kitchen products in its UK, South African and selected export markets. The portfolio of ten operating companies (6 UK, 4 South Africa) is characterised by strong individual brands, together providing product breadth and channel diversity from a strong supply chain base.

Clear progress evident, and more to come

FY24 results clearly showed that UK portfolio management is already starting to bear fruit and collaborative actions taken should support further margin progress in due course. Our fair value, other peer group metrics and strategic earnings potential all suggest a share price above current levels.

Revenue and EBIT came in just above indications in the pre-close update led by a firmer outturn from UK/Ireland operations. Reported EBIT margins were 13.6% in the UK (+100bp yoy), 4.4% in South Africa (-260bp) and 11.0% at group level (+30bp). UK and group operating margins for continuing operations in FY24 were 15.0% and 11.8% respectively. DPS was held at FY23 level and year end net debt (pre IFRS16) basis was in line at c.£37m after strong H2 cash inflow.

FY25 has started positively for Norcros suggesting outperformance in markets where wider commentary remains generally cautious. GDP forecasts for both of Norcros’ primary countries of operations show modest expected growth and we have made no material changes to our underlying revenue and EBIT expectations, save for adjusting to prevailing £/ZAR rates.

Our fair value adjusts to 253.5p per share, down slightly due to peer group comparator effects. The previous analysis of group strategy and potential earnings implications is unchanged, with a prospective valuation in excess of 400p per share.



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