Greek woes deepen losses at Norcros - Crain's Manchester Business

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Tile and shower manufacturer Norcros Plc is based in Wilmslow

8:25 am, June 22, 2010
Greek woes deepen losses at Norcros

Economic problems in Greece have led to a doubling of losses at tile and shower manufacturer Norcros Plc (LSE: NXR).

The Wilmslow-based group today posted a £10m pre-tax loss for the year to March 31, after taking a £5.7m hit when it wrote off the entire value of Philkeram Johnson, its 50 per cent owned Greek tile and adhesives business.

Norcros said the Greek company “continues to be impacted by the prolonged downturn in local building activity levels” and the write-off includes a currency hedge.

The pre-tax loss was more than double last year's £4.8m but excluding exceptionals, the group made an underlying pre-tax profit of £4.2m (2009: £3.4m) on revenue up 10 per cent at £169.6m.

Norcros said its UK businesses, which include Johnson Tiles and Triton showers, had been “resilient” and said it expected that a revamp of its troublesome South African operations would bear fruit in the current year.

The group also announced today that Nick Kelsall would become group chief executive-designate on July 1 and would take over when Joe Matthews retires next April.

John Brown, chairman, said: "Looking ahead, the UK outlook for consumer spending in the current year remains uncertain. Public sector investment is expected to decline, whilst private sector investment is forecast to remain muted. In South Africa, the economy is projected to show a slow recovery.

“Despite these challenging conditions, the group is in good shape with a strong balance sheet, following the recent capital raising, and resilient revenue driven by essential repair and maintenance activity and continued focus and investment in new product development. Last year's major operational improvements in our South African operations should also yield benefits in the current year.

“An encouraging start has been made to the current financial year. With the strength of our leading market positions, we believe the group is well positioned to take advantage of any organic growth opportunities in its key markets as well as any market recovery when it occurs and we look forward to making further progress in 2010/11."

The group skipped its interim dividend and today said there would be no final dividend either.

The Triton shower business increased its trading profit after boosting total revenues by 9.3 per cent, with UK revenues 12.3 per cent higher and export revenues down 4.8 per cent due to lower sales in Ireland.

Norcros said the business had “significantly outperformed” the retail market and had maintained its leading UK position and increased market share. The weak pound and higher copper and zinc prices had been offset by cost cutting.

Johnson Tiles increased revenues by 8 per cent, and by 6.6 per cent in the UK, despite “extremely tough trading conditions”. Norcros said the UK tile is market estimated to have declined by about 10 per cent with the private contract market 20 per cent down. In recent months, consumer and private house builder markets had stabilised, it added.

Johnson has focused on the commercial and DIY multiples segments and on the private sector specification market. Sales to the consumer have benefited from new inkjet printed products. Meanwhile costs have been cut, including an across the board 5 per cent pay reduction, which helped the business to make a trading profit.

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