Norcros Plc (LON:NXR) had a strong half-year report, with operating profit down less than 3% despite revenue pressures. Operating margins rose and the UK segment had record profits. Norcros gained market share in the UK and South Africa. With strengths often overlooked and pension issues resolved, Edison Research say it’s a good investment opportunity with shares valued at 246p, indicating a 50% upside potential.
H1 Analysis: Pressures and Strategic Progress
Despite an 8.3% year-over-year decline in H1 revenue, dropping to £201.6 million, Norcros showed resilience with a mere 2.7% reduction in underlying operating profit. This was primarily a consequence of revenue decline, but the company’s strategic actions led to a 60 basis point increase in underlying operating margin to 10.6%. These actions included the closure of the adhesives operation and a 50% capacity reduction at Johnson Tiles. The company’s strong cash generation contributed significantly to the reduction of net debt from £58.9 million to £46.6 million.
Norcros plc (LON:NXR) is a leading B2B producer of branded bathroom and kitchen products for its UK, South African and selected export markets. The portfolio of eleven operating companies (7 UK, 4 South Africa) is characterised by strong individual brands, together providing product breadth and channel diversity from a strong supply chain base.
