According to the latest research note from Cavendish, bathroom and kitchen products group Norcros Plc (LON:NXR) has delivered a steady set of interim results that keep it comfortably on track for its FY26 targets.
The note, written by David Buxton, Director of Research at Cavendish, highlights how the company has maintained progress despite testing market conditions. As Buxton puts it, “Interims show a resilient performance against variable markets.”
Half year performance at a glance
For the 27 weeks to 5 October, Norcros reported revenue of £184.3m, up slightly on the prior period, with like for like constant currency sales growing by 0.8 percent. Adjusted EBITDA rose 7.9 percent to £23.2m and adjusted operating profit increased 7.4 percent to £21.9m, lifting the operating margin to 11.9 percent. Adjusted profit before tax grew 9.4 percent to £18.7m, while adjusted diluted earnings per share moved up 11 percent to 16.3p.
Cash generation was strong, with cash conversion improving to 107 percent. Net bank debt fell by £6.1m to £30.7m, giving a conservative leverage level of 0.6 times before the completion of the Fibo acquisition. The interim dividend was raised 5.7 percent to 3.7p per share.
Interim highlights
Half year to 5 October
- Revenue £184.3m, up 1.3 percent, with 0.8 percent like for like constant currency growth
- Adjusted EBITDA £23.2m, up 7.9 percent
- Adjusted operating profit £21.9m, up 7.4 percent, margin 11.9 percent
- Adjusted profit before tax £18.7m, up 9.4 percent
- Adjusted diluted EPS 16.3p, up 11 percent
- Interim dividend 3.7p, up 5.7 percent
- Net bank debt reduced to £30.7m, leverage 0.6 times
- Underlying return on capital employed up to 18.1 percent
These figures sit slightly ahead of Norcros’s usual half year weighting, with first half sales representing 49 percent of FY26 forecast revenue, compared with the more typical 45 percent seen in earlier years.
UK and South Africa divisions
The core UK and Ireland business, which now contributes around 72 percent of group sales, delivered revenue of £132.9m, an increase of 1.2 percent, with new product launches and service levels helping the company gain share. Operating profit in the region rose 10.7 percent to £19.7m, pushing margins up from 13.6 percent to 14.8 percent. The chart of UK operating margins on page 4 of the note shows a clear upward trend over several years, underlining the impact of efficiency initiatives and portfolio changes.
In South Africa, where conditions remain more difficult, revenue grew modestly to £51.4m on a continuing business basis, with constant currency growth of 0.8 percent. Operating profit came in at £2.2m and margins of 4.3 percent reflect ongoing macroeconomic pressures in that market.
Strategy, Fibo acquisition and financial position
Norcros has continued to reshape its portfolio, moving further towards an asset light model. It has exited tile manufacturing in both the UK and South Africa, withdrawing from lower margin, capital intensive activities. At the same time, management is investing in higher growth, higher return areas, supported by logistics consolidation and other operational improvements.
A key strategic step is the £46m acquisition of Fibo Holding, a Norwegian supplier of waterproof decorative wall panels with sales across Scandinavia, central Europe and the UK. Fibo generated sales of £63m and EBITDA of £7.3m in 2024, and the deal is expected to enhance earnings while creating cross selling opportunities alongside Grant Westfield.
Although the purchase lifts pro forma leverage to around 1.6 times, the research expects strong cash generation to reduce this towards 1.2 times by FY27. The pension scheme remains in surplus, which should also support cash flow as deficit repair payments unwind in due course.
Valuation and outlook
Despite a stronger share price over the year, the Cavendish note suggests Norcros still trades on a relatively low rating. On FY27 estimates, the shares sit on a price to earnings multiple of 7.4 times and an EV to EBITDA multiple of 5.4 times, which the broker calculates as a 33 percent discount to the peer group median P E of 11.1 times. The target price remains 380p, implying around 30 percent upside from the current level used in the report.
The share price chart on page 1 shows that, while the stock has risen over the past twelve months, there remains room for further recovery if Norcros continues to meet expectations and markets stabilise.
Final Thoughts
In summary, according to the latest research note from Cavendish, Norcros plc is delivering on its strategy of improving margins, focusing on attractive product categories and generating solid cash flows, even in mixed market conditions. The addition of Fibo broadens its geographic reach and strengthens its position in waterproof wall panels, while the balance sheet remains manageable. For investors following UK building materials and home improvement names, Norcros is presented as a business that is progressing towards its FY26 goals with a supportive valuation backdrop.
