REG - Victoria PLC - Full Year Trading Update

VictoriaAnnouncement

25/04/2023 07:00

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RNS Number : 2667X  Victoria PLC  25 April 2023

For Immediate Release
 
                                 25 April 2023

 

 

Victoria PLC

('Victoria' or the 'Company', or the 'Group')

 

Full Year Trading Update

 

Strong growth in line with market expectations

Confident outlook for further earnings and cash flow growth

 

Victoria PLC (LSE: VCP), the international designers, manufacturers and
distributors of innovative flooring, provides a trading update for the
financial year ended 1 April 2023, confirming the Board expects Group revenues
and underlying EBITDA to be in line with consensus market expectations 1 ,
successful progress in earnings enhancing integration of acquisitions, and a
confident outlook for FY24 following management actions to mitigate near term
macro-economic pressures influencing consumer demand and inflation.

 

Trading update

 

Despite challenging macro-economic conditions, Victoria PLC, is set to deliver
its tenth consecutive year of revenue and underlying operating profit growth.
Total volume sold will exceed 200 million square metres (more than 29,500
football fields) for the first time in the Company's history with revenues for
the year ended 1 April 2023 of more than £1.45 billion, alongside continued
growth in underlying operating cashflow.

 

Earnings enhancing reorganisation of Balta on track

 

In April 2022, the Company acquired the rugs and UK carpet divisions of Balta
Group, together with the internationally-known brand, "Balta", establishing
Victoria as Europe's largest carpet and rug manufacturer.

 

The integration of Balta is proceeding successfully with the reorganisation
programme on schedule and the Board anticipates completion this calendar year,
with a materially positive impact on future earnings and cash flow. The Board
expects to realise synergy gains of no less than €15 million per annum (+2%
margin for the division) upon completion.

 

This reorganisation consists of three key projects:

 

(i)            The relocation of Balta's carpet manufacturing from
Belgium to the Group's more modern and more productive UK factories in Wales
and Yorkshire, with a net reduction of 295 employees. 80% of Balta's carpet is
sold in the UK, Europe's largest carpet market, and this move will enable
Balta to sell the same historical quantity (c. € 100 million revenue per
annum), but with lower production and transport costs alongside improved
customer service from shorter delivery times.

 

(ii)           The consolidation of the Balta rug manufacturing
operation onto Victoria's large site at Sint-Baafs Vijve, Belgium, with the
closure of the nearby factory at Avelgem, together with the relocation of some
production to Usak, Turkey, where the Group has two very modern rug and yarn
extrusion factories. These changes will improve efficiency and lower
production costs, with the same output (c. €240 million revenue per annum)
being achieved with 220 fewer employees.

 

(iii)          The sale of non-core assets acquired with the Balta
transaction where the opportunity for synergies with the Group's existing
businesses are minimal, with the proceeds being used alongside the Group's
operational cash generation to further reduce Group leverage.

 

Outlook

 

The Directors' conviction that Victoria is well-positioned to deliver further
earnings and cash flow growth in FY24 and beyond is underpinned by the known
synergy gains from completion of the Balta reorganisation. Furthermore, whilst
the Group is not immune to the external factors that impact consumer demand or
inflationary pressures, the Board is confident that Victoria's inherently low
operational gearing, combined with price increases (where essential), cost
savings, and tight supply chain management, will mitigate the financial impact
of any macro-economic uncertainty in the year ahead.

 

Consequently, Victoria remains competitively very well placed in its markets
to defend its position and capitalise on opportunities where gaps appear, and
the Directors are confident in the Company's ability to continue to create
wealth for shareholders.

 

Date of Preliminary Results

The Board expects to announce the Group's preliminary results for the year
ended 1 April 2023 in July 2023.

 

Executive Chairman Geoff Wilding said,

"We are laser-focussed on the reorganisation of Balta and the integration of
other recent acquisitions. Completion of these projects is expected to deliver
a significant uplift in productivity and cash flow, even during a period of
economic uncertainty, which underpins our confidence in outlook for FY24
earnings growth and deleveraging."

( )

 1  The latest Group-compiled view of analysts' expectations for FY 2023 gives
a range of £1,364m-£ 1,519m for revenue, and a range of £196m-£203m for
underlying EBITDA.

 

 

Note: ( )Underlying performance is stated before exceptional and
non-underlying items

 

For more information contact:

 

 Victoria PLC                                                                   www.victoriaplc.com/investors-welcome

                                                                              (http://www.victoriaplc.com/investors-welcome)
 Geoff Wilding, Executive Chairman

                                                                              Via Walbrook PR
 Philippe Hamers, Group Chief Executive

 Brian Morgan, Chief Financial Officer

 Singer Capital Markets (Nominated Adviser and Joint Broker)                    +44 (0)20 7496 3095

 Rick Thompson, Phil Davies, James Fischer

 Berenberg (Joint Broker)                                                       +44 (0)20 3207 7800

 Ben Wright, Richard Bootle

 Peel Hunt (Joint Broker)                                                       +44 (0)20 7418 8900

 Adrian Trimmings, Andrew Clark

 Walbrook PR (Media & Investor Relations)      +44 (0)20 7933 8780 or victoria@walbrookpr.com

                                             (mailto:victoria@walbrookpr.com)
 Paul McManus, Lianne Applegarth,

                                             +44 (0)7980 541 893 / +44 (0)7584 391 303 /
 Alice Woodings

                                               +44 (0)7407 804 654

 

About Victoria PLC (www.victoriaplc.com (http://www.victoriaplc.com) )

 

Established in 1895 and listed since 1963 and on AIM since 2013 (VCP.L),
Victoria PLC, is an international manufacturer and distributor of innovative
flooring products. The Company, which is headquartered in Kidderminster, UK,
designs, manufactures and distributes a range of carpet, flooring underlay,
ceramic tiles, LVT (luxury vinyl tile), artificial grass and flooring
accessories.

 

Victoria has operations in the UK, Spain, Italy, Belgium, the
Netherlands, Germany, Turkey, the USA, and Australia and employs
approximately 5,800 people across 31 sites. Victoria is Europe's largest
carpet manufacturer and the second largest in Australia, as well as the
largest manufacturer of underlay in both regions.

 

The Company's strategy is designed to create value for its shareholders and is
focused on consistently increasing earnings and cash flow per share via
acquisitions and sustainable organic growth.

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