Flooring group Victoria has seen sales jump by more than 40%.
The group is unable to publish its full-year results as its auditors have requested more time, however the group says sales grew by 43.3% to £1.461bn in the year to 1 April. A decade ago sales were £70.9m.
Underlying EBITDA is expected to have grown by 20.4% to £196m.
The group says integration projects have been on time or ahead of schedule and it expects more than £20m a year in profits as a result.
‘With all major integration projects in their final stages, we expect FY2024 to be a year of two halves, with stronger H2 earnings as the benefits of the reorganisation are experienced. Completion of the projects is also expected to result in Victoria’s free cash flow increasing sharply from H2 FY2024, with management focussed on returning to our long-run average cash conversion of EBITDA to net free cash flow of 55%. Further ahead, FY2025 will see the full benefit of the successful acquisitions’ integration with an expected uplift in margins driving an additional increase in earnings and free cash flow,’ says Geoff Wilding, Victoria executive chairman.
‘Victoria benefits greatly from being in a long-duration, steady growth industry that will drive compounding organic growth for decades. After making two-dozen careful acquisitions over the last 10 years we have now achieved a scale that, once we have completed the current integration projects, will result in higher productivity, more efficient logistics, wider distribution, and lower input costs than almost all our competitors. Coupling this scale advantage with the underlying sectoral tailwinds will, the board believes, deliver outsized returns for our shareholders for a very long time.’
The group says that with higher interest rates it will look to cut its net debt of £658.3m.
Wilding added that the group expects to pay less for acquisitions, reflecting higher inflation and interest rates, and that it has a ‘compelling’ pipeline of potential buys.
‘Private company owners typically take time to adjust their valuation expectations, but the same selling imperatives remain (retirement being the most common) and so asking prices will, in time, reflect the new reality. Consequently, at lower free cash flow multiples, Victoria’s acquisitions will continue to provide the same return on capital as previously, notwithstanding a higher cost of capital. Therefore, at the right time and within our leverage policy, we will continue deploy capital to build scale, expand distribution, broaden our product range, and widen the economic moat around our business as we have successfully done over the previous 10 years.’
