£168.2m market cap

209p last close

Norcros is a leading supplier of showers, enclosures and trays, tiles, taps and related fittings and accessories for bathrooms, kitchens, washrooms and other commercial environments. It has operations in the UK and South Africa, with some export activity from both countries.

Investment summary

Group revenue growth and enhanced operating margins in FY19 resulted in uplifts in Edison norm PBT (c 27%), EPS (c 8%) and DPS (c 8%). Merlyn was a significant contributor to Norcros’s UK progress in its first full year of ownership and Triton’s performance was also notable. Performance across the other UK businesses was more variable but H2 profitability was strong in still mixed trading conditions. Revenue rose in South Africa but profits were held back at JTSA due to planned factory upgrade activity and some sub sector pricing pressure. The post year end acquisition of RAP Plumbing Supplies increases local exposure to the trade channel, is an additional potential outlet for other group products and complements Tile Africa’s retail presence. Our estimates are under review.

Y/E Mar
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 271.2 31.6 20.7 24.4 8.6 5.0
2018A 300.1 34.7 24.4 26.8 7.8 6.0
2019E 331.0 42.1 31.1 29.5 7.1 4.5
2020E 355.2 45.9 34.0 32.0 6.5 4.9
Industry outlook

The UK residential new-build sector has performed well and there is impetus for this to continue. RMI spending has not recovered at the same rate. The South African economy is facing a number of challenges; wider distribution of wealth and an emerging middle class should benefit consumer spending over time. Norcros management’s 2023 financial targets are to attain £600m revenue with a balanced UK/overseas split and to sustain a ROCE of 15%+.

Last updated on 25/07/2019
Share price graph
Balance sheet
Forecast net debt (£m) 36.1
Forecast gearing ratio (%) 28
Price performance
Actual (7.5) 0.5 (4.6)
Relative* (8.6) 0.0 (1.9)
52-week high/low 228.0p/185.5p
*% relative to local index
Key management
Nick Kelsall CEO
Shaun Smith CFO