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Norcros - full-year trading update boosts shares: BUY

By Steve Moore & Tom Winnifrith | Monday 17 April 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Supplier of branded showers, taps, bathroom accessories, tiles and adhesives, Norcros (NXR) has updated that year ended 31st March 2017 adjusted operating profit “is expected to be in line with the board's expectations” and that “the board is confident that the group is well placed to make further progress”

This is on the back of 4% constant currency like-for-like revenue growth (this -0.2% at the half-year stage) as the second half of the year saw lower South African such growth (though still 7%), more than offset by a UK swing from -5% to +8.3% as “a strong recovery in all segments” was noted. Good cash generation is also stated to have reduced year-end net debt to circa £24 million (prior year: £32.5 million).

The company though still notes “challenging markets” and is expected to take a circa £2.3 million charge for a recently commenced restructuring of its, Johnson Tiles, UK tiles business. It expects this to pay back in cash terms within twelve months, whilst we continue to look for improvement on the 28.5p in adjusted earnings per share and 6.6p of dividends per share of the prior year.

The announcement has helped the shares up to 172p, but we continue to consider there highly attractive value on fundamentals and in terms of income on offer here - and, ahead of a 14th June-scheduled results announcement, our stance remains buy.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tips from Tom & Steve and more from Lucian later this week click HERE

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