Victoria still outperforms market as full-year losses widen
By Josh White
Date: Wednesday 19 Jun 2024
(Sharecast News) - Flooring manufacturer and distributor Victoria said in its final results on Wednesday that despite macroeconomic challenges affecting consumer spending on flooring, it still outperformed the broader market in several key regions.
The AIM-traded company said its underlying revenue decreased to £1.26bn from £1.46bn in 2023, with underlying EBITDA falling to £160.7m from £196m.
Underlying operating profit dropped to £73.6m from £118.8m, and underlying profit before tax was £27.1m, down from £76.9mi.
The statutory net loss after tax widened to £108m from £91.8m, and the statutory operating loss increased to £51.8m from £34.1m.
Victoria said its underlying free cash flow declined to £28.2m from £71.3m, while net debt was reduced to £632.9m from £658.3m.
Basic losses per share rose to 93.85p from 79.35p, and diluted adjusted earnings per share dropped to 19.12p from 39.06p.
The company highlighted the success of its integration projects, particularly in the UK and Europe broadloom carpet division, which saw a 370 basis point margin improvement and a 23.8% increase in underlying EBITDA to £82.8m despite lower volumes.
Management said it aimed to complete ongoing integration projects to achieve a structural improvement in operating margins by 250 to 350 basis points.
Victoria said it maintained its production capacity and reduced its workforce by 16%, or 1,170 employees, due to business unit reorganisation.
The group's liquidity position remained strong, with cash and undrawn credit lines exceeding £250m.
Most of the company's debt was in senior notes, with no financial maintenance covenants and the earliest repayment due in August 2026.
The board said it was proactively working on refinancing options to optimise terms and reduce leverage.
Victoria said the audit by Grant Thornton addressed concerns regarding Hanover Flooring, a subsidiary contributing 1.25% of group revenue, confirming no financial misconduct and all payments accounted for.
The board said it remained confident in the company's strong economic fundamentals and skilled management, anticipating normalisation of demand despite near-term macro-economic challenges.
"Whilst we remain cautious about near-term trading conditions and cannot predict precisely when demand will normalise, we are logically continually moving closer to that point," said executive chairman Geoff Wilding.
"As interest rates fall, housing transactions and deferred residential renovation, improvement and repair purchases will rebound, driving flooring demand."
Wilding said the company expected the market outperformance and productivity improvements secured over the last 24 months to then be rapidly reflected in Victoria's earnings and cash flow.
"Until this occurs, we remain focussed on minimising controllable costs and driving market share gains."
At 0903 BST, shares in Victoria were up 2.44% at 176.2p.
Reporting by Josh White for Sharecast.com.
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