Norcros issues profit warning, suspends guidance for financial year

A Wilmslow-based supplier of bathroom and kitchen products has issued a second profit warning and suspended previous guidance for the financial year.

Norcros, which owns seven brands in the UK including Johnson Tiles, Triton and Merlyn, said it expects underlying operating profit for the year to March 31 to be £31m, down from a previous forecast of £35m.

It comes after the group reported in February that a “slower than anticipated” return to full production at its China suppliers would impact its full-year financial performance.

“All of this reduction is attributable to the COVID-19 situation, is considered both temporary and exceptional, and follows a period of robust trading including market share gains,” the group said.

The group said its supply chain in China had returned to operating at “close to normal levels”.

However, “the nature and the extent of the commercial impact has changed significantly moving from a supply chain issue into a global demand one”.

Norcros said the 21-day lockdown directive in South Africa – effective from March 26 – had meant the group mothballed its operations and ceased trading.

In the UK, the group said it had been in discussions with its customers to understand better how they plan to trade in the coming weeks.

Norcros said it had taken “immediate action” to preserve cashflow, including deferring all non-essential capital expenditure and all discretionary operating expenditure.

Chief executive Nick Kelsall said: “These are unprecedented times, with our most important consideration being the health and safety of our employees, customers, and all other stakeholders.

“Norcros has a strong balance sheet and the board is confident that the short term actions being taken in response to the impact of the global Covid-19 pandemic together with the Group’s leading market positions, strong brands and broad distribution channels will enable it to return to growth as soon as practicable.

“The current uncertainty means that we have to focus on short term measures which need to be balanced with the objective of ensuring our business emerges well-positioned to progress our longer term strategy.”

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