Flooring maker Victoria’s rising revenue leads fightback after October bonds fumble saw shares plummet

Flooring company Victoria’s share price increased this morning as revenue jumped in its interim report, just weeks after it pulled out of a plan to issue bonds which caused shares to plunge 35 per cent in two days last month.

The figures

Underlying pre-tax profit jumped 87 per cent for the six months ending 29 September from £18.3m to £34m year-on-year, while revenue grew by £83.9m for the period from £189.5m to £273.4m, a 44 per cent increase.

Net debt was £342.7m following the company’s acquisition of bathroom tiling firm Ceramica Saloni in August, up from £98.6m last year, while it doubled cash flow from £17.4m to £34.8m.

Underlying earnings per share grew from 13.10p to 17.91p over the period.

Why it’s interesting

Victoria, the largest flooring manufacturer in the UK, has seen strong increases against a “challenging” market backdrop, driven by acquisitions which have diversified its operation.

It’s August buyout of Ceramica Saloni for £86.2m saw an increase in net debt, but the company said this was in line with its strategy of repeatedly buying smaller companies to gain market share and using the increased cash flow to cover its costs. The company has made 13 purchases of businesses in the last six years.

The company saw shares plummet at the end of October after it considered issuing bonds to refinance its existing bank facilities, “but the rates available at that time were not in Shareholders' best interests”.

What Victoria said

Executive chairman Geoff Wilding said:

"Our progress was made against a backdrop of a challenging market and our strategy of achieving product and market diversification over the last few years has enabled us to adapt well to various market conditions and tailor our offering accordingly. This remains a key strength of the Group relative to its competitors.

“In the UK, for example, we have been able to materially grow market share by introducing new value-orientated products and brands (alongside existing, predominantly mid-upper priced, products), safe in the knowledge that, although our margin growth is a little slower this year…growth will be continued next year driving returns for our shareholders.”