Norcros
Ticker: NXR Exchange: LSE www.norcros.com/

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.

Steering a steady course in H1'25

Norcros’ H1'25 pre-close statement infers that headline trading in Q2 was similar to Q1, leaving group revenue flat overall y-o-y for continuing businesses. On the same basis, while profitability looks to be slightly lower - which may reflect mix effects - company expectations for the full year are unchanged.

While easing inflation and interest rates have been welcomed in Norcros’ primary markets, any significant pick-up in economic activity is still pending as new governments bed in in both cases. H125 LFL revenues nudged ahead in the UK (continuing operations +1%) and declined modestly in South Africa (-2% at constant currency) giving a flat y-o-y performance at group level, excluding the exited Johnson Tiles UK and Norcros Adhesive businesses.

Our expectation is that management will report more fully on strategic actions taken to date with the H124 results. The completion of Vado’s warehouse consolidation moves and streamlining Grant Westfield’s distribution are two examples of positioning these businesses for growth with more efficient service platforms and greater alignment in these areas across operating companies.

We make no changes to our estimates or fair value ahead of the H1 results due out in November. As before, we believe that translating strategy into enhanced earnings growth can be the catalyst for generating share price upside that could be well in excess of our current fair value of 253.5p / share.

 

 
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