A leading flooring conglomerate has announced that the industry is experiencing its worst downturn in 30 years, with demand significantly lower than pre-pandemic levels.
Victoria PLC, the international designers, manufacturers, and distributors of innovative flooring, recently provided a trading update for the six-month period ended 1 October 2024 ahead of publishing its half-year financial results in late-November.
Photo: Victoria PLC.
According to the report, flooring demand across Victoria's markets has continued to be soft, with H1 revenue expected to be circa £580 million and Underlying EBITDA expected to be circa. £50 million, which is a continuation of the lower demand environment experienced in H2 FY2024 (£64.9 million).
The wider market is witnessing an estimated 20-25% decrease in demand versus 2019 levels, although the company has generally outperformed the market and continued to improve its competitive position - particularly in the UK. The Board expects H2 trading to be stronger as a result of the actions taken by management (outlined below) alongside a small improvement in demand, although earnings are likely to be below consensus expectations.
Whilst industry-wide low demand is impacting margins due to operational leverage, pricing remains stable and management is taking actions to optimise the cost base and this will drive better margin results when demand recovers.
Chief Executive, Philippe Hamers, says: 'The flooring sector is experiencing the most severe and longest decline in demand in the last 30 years. During this period, we have focussed on optimising productivity and reducing operational costs whilst maintaining the same potential production capacity. These actions will have a very material positive impact on earnings and cash flow as demand normalises with the anticipated improvement in the macro-economic environment and increase in housing transactions, a key driver of demand. Clearly the recovery continues to draw closer, although it is difficult to pinpoint precisely when it will begin. However, we remain prepared for growth when the time arrives, which will be delivered without any significant capex spend.'
More information:
Victoria PLC
www.victoriaplc.com