Norcros: Resilient Performance Amid Challenging Environment

Norcros, the number one bathroom products business in the UK and Ireland, today announces its results for the year ended 31 March 2025.

Financial summary

1 LFL - Like for like after adjusting for the sale of Johnson Tiles UK in May 2024 and the closure of Norcros Adhesives in June 2023

2 Definitions and reconciliations of alternative performance measures are provided in note 5

3 Operating profit is stated after acquisition and disposal related costs (c.£25.4m largely relating to the sale of Johnson Tiles UK), exceptional operating items and IAS 19R administrative expenses. Details are contained later in this statement

Highlights

• Strong progress in a challenging environment:
  
  o  UK and Ireland - record underlying profit of £39.8m (2024: £38.4m) and underlying operating profit margin of 15.5% (2024: 13.6%)
  
  o  South Africa - resilient performance with underlying profit of £3.4m (2024: £4.8m); well placed to gain market share as conditions gradually improve
  
  
• Disciplined strategic execution driving market share gains and margin improvement:
  
  o  Portfolio development - sale of Johnson Tiles UK in May 2024 strengthens portfolio; strategic review of Johnson Tiles SA nearing completion
  
  o  Organic growth - launch of first complete bathroom range, increased cross-selling and market-leading customer service
  
  o  Operational excellence - benefits of scale and collaboration; Group freight strategy and distribution efficiencies
  
  o  ESG - Sustainable Products framework developed; good progress against 2028 SBTi targets and implementation of people and culture strategy
  
  
• Underlying operating profit² of £43.2m, in line with the prior year (2024: £43.2m)
  
  
• Underlying ROCE² of 17.3% (2024: 16.4%)
  
  
• Underlying cash conversion of 84% (2024: 123%), underlying net debt² of £36.8m (2024: net debt of £37.3m) representing 0.8x leverage²
  
  
• 1 April 2024 pension valuation agreed at an actuarial deficit of £11.7m (1 April 2021: £35.8m) with deficit repair contributions of c.£4.5m p.a. to end after June 2027
  
  
• Strong balance sheet and capital availability - active M&A pipeline and confident of future strategic progress

Medium term strategic targets 

The Group remains committed to, and confident of, delivering our previously stated medium term strategic targets: 

• Organic growth at 2% - 3% above the market
  
  
• Group underlying operating profit margin to reach 15%
  
  
• Cash conversion greater than 90%
  
  
• Return on capital employed greater than 20%
  
  
• Delivery of SBTi-validated science-based emissions targets by 2028

Current trading

Group revenue in the two months to the end of May 2025 was 1.8% below the prior year on a constant currency like for like basis, adjusting for Johnson Tiles UK and the number of trading days in the period (UK and Ireland -1.1%, SA -3.2%). Market conditions are likely to remain uncertain, with the pace of recovery in the new build sector still unclear, however, the RMI sector remains resilient and the Board's expectations for FY26 remain unchanged. 

Thomas Willcocks, CEO, commented:

"In the context of current market challenges, I am pleased with the performance over this period and excited by the significant opportunities that remain in the more resilient mid-premium market segments where we hold leading positions. 

Our strategy is working and has momentum, building from a position of strength and scale as we actively leverage the customer and operational synergies within the Group. Our continued progress across our four key strategic pillars is delivering as demonstrated by our operating margins in our core UK & Ireland markets moving above 15% for the first time. 

Whilst we are beginning to see some early evidence of a level of confidence starting to return to the sector, especially in new build, we are not reliant on any major recovery to deliver further progress against our medium term targets and as a result, the Board's expectations for FY26 remain unchanged".

Chair's Statement: 

Resilient performance, with clear platform for growth

I am pleased to present my second annual statement as Chair of Norcros. Looking back at the robust performance delivered over the last year, I continue to be impressed by the strength of our differentiated businesses, the energy and professionalism of our teams, and the strategic progress the Group is making as it builds on its position as the number one bathroom products business in our core UK and Ireland regions. 

Progress in a challenging environment

The Group has delivered results in line with expectations and continued progress on our pathway to delivering the medium-term targets published at the start of the year. I am particularly pleased that we have continued to strengthen the business and take market share despite the ongoing macroeconomic challenges in our operating markets. 

Norcros has an impressive record of consistently delivering through-cycle market share growth, leveraging both our organic growth and M&A expertise to good effect, with a focus on building a stable of strong, attractive brands aimed at the more resilient mid-premium market segments. As a consequence, we are less cyclical than most other businesses listed in the building product category. 

Delivering against our strategic objectives

At our Capital Markets Event in 2024, we set out clear medium-term ambitions for the Group, and we are pleased with the progress delivered against those targets. We have acted to strengthen the capital-light composition of our portfolio, driving meaningful progress in operating margins and return on capital employed in our core UK and Ireland markets. This included the sale of Johnson Tiles UK, which was completed in May 2024. In addition, our strategic review of Johnson Tiles South Africa is nearing completion. 

We continue to invest in organic growth driven by new product development, cross-selling, and exceptional service levels. This has been supported by operational improvements across the Group, including the consolidation and modernisation of key warehousing and distribution facilities in the UK and Ireland. 

The UK, Ireland and European bathrooms market remains fragmented, presenting attractive opportunities to augment our organic growth through further consolidation of our core and adjacent market segments. This remains an important element of our strategic plans with a number of opportunities at various stages of development in our pipeline. 

The Board remains confident in the growth opportunities available to the Group.

Dividend

The Board is recommending a final dividend of 6.9p per share (2024: 6.8p). When combined with the interim dividend of 3.5p per share, this brings the total dividend for the year to 10.4p per share, up 2.0% compared to the prior year and maintaining an appropriate level of dividend cover. 

Outlook

The Group has made important progress this year, strengthening the business and delivering against its strategic objectives despite a challenging market backdrop. Whilst macroeconomic conditions remain uncertain, Norcros is well-placed to demonstrate its resilience and continue to grow share in the bathroom products markets. 

The Board remains confident in the Group's prospects and looks forward to continuing to support and challenge management in the successful execution of our strategy.

Current trading

Group revenue in the two months to the end of May 2025 was 1.8% below the prior year on a constant currency like for like basis, adjusting for Johnson Tiles UK and the number of trading days in the period (UK and Ireland -1.1%, SA -3.2%). Market conditions are likely to remain uncertain, with the pace of recovery in the new build sector still unclear, however, the RMI sector remains resilient and the Board's expectations for FY26 remain unchanged.

Business review - UK and Ireland 

Our core UK and Ireland business achieved revenue of £256.4m (2024: £281.9m), up 1.1% on a like for like basis delivering ahead of the market organic growth. Reported revenue was 9.0% lower than the prior year largely due to the sale of Johnson Tiles UK, which completed in the first quarter of the year. Our continued focus on the quality of our portfolio and market share gains delivered a record level of underlying operating profit in the year with underlying operating margins exceeding 15% for the first time.

The previously announced sale of Johnson Tiles UK to its management team was completed in May 2024. Revenue of £4.3m (2024: £31.1m) and underlying operating profit of £nil (2024: £0.7m) have been included in the underlying results for the current and prior year.

RMI remains the largest component in the UK and Ireland bathroom market (circa 80%). Our market-leading brands are positioned in the mid-premium segment, which was again more resilient than the rest of the sector this year. Although housebuilding activity remained subdued, there are early indications of recovery driven by the significant shortage of homes in the UK and Ireland, and the clear focus coming from the UK government. We have long-standing relationships with the leading national and regional housebuilders and continue to grow share in this channel. Our alignment with new building regulations (particularly regarding energy and water), outstanding customer service, and strong balance sheet means that we are a trusted partner that will benefit through this recovery cycle. Representing a relatively small part of the UK and Ireland business, export sales were slightly ahead of the prior year and remain largely unaffected by tariff uncertainty.

All of our brands performed strongly, growing their market-leading positions through new product launches and excellent service levels. New products included Cameo (VADO's first complete and matched bathroom offer), Naturepanel (Grant Westfield's FSC-certified wall panel that can also be used outside of the bathroom), and our first fully recyclable toilet seat (Croydex) with all performing ahead of expectation. Our in-house design capabilities allow us to cover all aspects of bathroom product design including fashion, technical and sustainability aspects, and then get these safely to market in quick order. Triton has also recently launched UniQ™, a technically innovative patented corner riser rail and overhead shower solution, which is particularly beneficial in new build homes where showering space can be at a premium. They have also taken the next important step in terms of our already strong sustainability credentials, launching a patented heat recovery system (HeatRepeat) that will significantly reduce the amount of energy required in electric showers. Our product vitality rate remains high and our pipeline of new exciting products remains well developed.

Our market-leading product vitality, at 23%, and focus on a great customer experience again saw the business not only deliver a strong financial performance, but also earn industry recognition, winning a number of prestigious awards during the year. In May 2024, Triton was honoured with the King's Award for Enterprise for its outstanding commitment to sustainable development. Triton also won a PlanetMark award for employee engagement with its sustainability initiatives and "Genius Bathroom Product" award from Ideal Home for ENVi^®. Grant Westfield's Naturepanel won KBB's Surface of the Year Award and the Tile Collection won Ideal Home's Surface of the Year Award. Abode's eco-conscious CAVA basins have already won Showhome's Bathroom Product of the Year. MERLYN won a number of awards in recognition of the brand's outstanding customer experience and was once again recognised as Shower Brand Supplier of the Year from the Fortis Buying Group. 

In line with our strategy, we continue to invest in driving efficiencies from a service and cost perspective, helping to develop an already strong service proposition. This includes investment in both systems and our infrastructure. Two major structural projects were completed in the year. The first saw Grant Westfield exit a regional depot distribution model in favour of central distribution, where the warehouse and distribution function has been consolidated with MERLYN. The second project at VADO resulted in four separate warehouses being consolidated into a new fit-for-purpose warehouse in Bridgwater. The result was a reduction in our UK warehouse footprint from 26 to 15 sites and, more importantly, enables a more efficient service to our customers. 

Our commitment to our ESG programmes and initiatives has been strengthened over the last year with strong progress being made on our environment (planet) and social (people) initiatives. Our businesses are well on track to delivering on our 2028 SBTi commitments ahead of schedule with more detail included in our standalone Sustainability Report. 

The UK and Ireland business delivered a record underlying operating profit for the year. Underlying operating profit was 3.6% higher than the prior year, increasing to £39.8m, with the operating margin increasing by 1.9 percentage points to 15.5% (2024: 13.6%). Operating cash conversion was slightly below historical levels, due to the investment in working capital in the year as we carefully navigate what remain challenging supply chain conditions. 

Our core UK and Ireland business now accounts for 70% of Group revenue and 92% of Group underlying operating profit. We are well-placed to continue growing market share and winning new customers in our target market segments by leveraging our strong new product development pipeline, scale-based collaboration and superior customer service.

Source : Norcros plc

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