Norcros (NXR)

Norcros NXR Logo

The market leading supplier of innovative branded showers, taps, bathroom accessories, tiles and adhesives.

12-Oct-2017 – 168.13p – £104m

Trading Update For The 6 Months To End September 2017 – An in-line update which actually seems to be slightly ahead of expectations – Revenue up to £144.9m versus £128.8m last time – 12.5%higher (7.1% on a CC basis). The board is confident it will meet its expectations for the year to end March 2018.

On a PER of less than 6 this is quite interesting – There’s even a reasonably well covered Dividend of 4%+. But, there is Net Debt (20% of Mkt Cap) and a large pension deficit (around £100m). This combination is perhaps holding it back.

11-Apr-2018 – 185.75p – £148.9m – PER 5.92

Trading Update For The 12 Months To End March 2018 – Expected to be in-line, meaning nothing spectacular. Well placed to make progress despite challenging market conditions.

Looks quite good (if the forecasts are achieved) but I will remain Neutral for a few reasons. There’s a decent sized pension deficit and Net Debt here, re-organisation (job cuts), plus concerns on the South African (and I guess UK) side of the business. The ROCE and Operating Margin are nothing to write home about either.

13-Jun-2018 – 199.5p – £160.0m – PER 6.47

Results For The 12 Months To End March 2018 – In-line with a ninth consecutive year of growth – Revenue up 10.7% at £300.1m (2017: £271.2m), Underlying Operating Profit up 15.1% at £27.4m (2017: £23.8m), acquisition trading strongly (in-line with expectations and fully integrated), FY Dividend up 8.3% to 7.8p.

Still quite like this (Pension deficit reduced to £48m from £62.7m now) but not enough to yet change my view from Neutral.

25-Jul-2018 – 215p – £171.8m – PER 6.68

AGM Trading Statement – Q1 In-line and FY in-line too.

Still quite like this but I remain Neutral for now.

11-Oct-2018 – 202p – £162.2m – PER 6.24

Trading Update For The 6 Months To End September 2018 – In-line it seems, but challenging markets.

Neutral here – If it wasn’t for the challenging markets aspect I could certainly be more bullish here, quite a lot to like (in the fundamentals).

15-Nov-2018 – 226p – £181.5m – PER 7.1

Results For The 6 Months To End September 2018 – Revenue up 12.1%, Underlying PBT up 29.9%, EPS flat, Net Debt more than doubled (to £53.5m) and the Interim Dividend is up 7.7%  – “Robust performance in a challenging market environment”. Confident for FY.

I could be tempted away from Neutral here if the word “challenging” wasn’t so frequently used in all the updates.

16-Jan-2019 – 195p – £157m – PER 6.0

Trading Update And Acquisition – Buys South African Plumbing company for £12.1 (cash and existing facilities), to be earnings enhancing immediately. Current trading is challenging but in-line.

Would be tempting if it wasn’t for that HUGE Net Debt.

10-Apr-2019 – 188p – £151m – PER 5.8

Trading Update For The 12 Months To End March 2019 – Expecting PBT to be in-line with Net Debt down from £47.1m to £36m.

Nice to see that Net Debt come down and if it was not for the Pension Liability (£29m or so) and the exposure to South Africa (30% or so of Revenues) this would be more attractive. Tempting but still a few too many barriers for me.

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