Norcros is a leading supplier of bathroom and kitchen products in its UK, South African and selected export markets. The portfolio of eleven operating companies (7 UK, 4 South Africa) is characterised by strong individual brands, together providing product breadth and channel diversity from a strong supply chain base.

11 Apr 2024

FY24 matching up to our expectations

In meeting expectations for FY24, Norcros has demonstrated business resilience in the face of challenges in both of its primary markets. A positive cash flow performance has also left year end pre IFRS16 gearing below 0.9x underlying EBITDA.

In our view, neither virtue is reflected in the company’s valuation and the 1 May Capital Markets event should help to shed more light on the company’s strategy, market positions and medium-term prospects.

Encouragingly, UK margins improved further whereas in South Africa load shedding is abating and revenues stabilised. With net cash inflows, the group ended FY24 with c.£37m net debt (pre-IFRS16) versus c.£50m a year earlier.

Our fair value of 233p / share (very close to the H124 NAV / share) is unchanged and represents potential c.32% upside in a re-rating scenario.

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