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Victoria sees margins climb again

Victoria has seen its core profitability increase for the fifth successive year but acquisition expenses and redundancy costs hit pre-tax profits.

The group saw underlying EBITDA jump by 42% in the year to 31 March to £64.7m.

Sales rose by 29% to £424.8m.

Pre-tax profits fell from £18.8m to £13.4m as the group spent £11.2m on acquisition advice and reorganising UK operations. Of this £5.8m was associated with the purchase of Keraben last November. The UK reorganisation has cost over £4m, but this was les than expected.

‘Victoria saw another record year in 2018 and the group continues to go from strength to strength. In addition to focusing on increasing our top line, this was the fifth consecutive year of growth in underlying earnings per share, free cash flow, and operating margins,’ said Geoff Wilding, Victoria executive chairman.

‘The group continues to focus on growing in scale through acquisitions, with the completion of both Ceramiche Serra and Keraben during the year. There remains an enormous market opportunity for Victoria to expand in the UK and internationally, by organically growing margins and enhancing earnings within our existing business, as well as by acquisition, where we believe opportunities will make a meaningful contribution to the group.

‘Following a very good start to the year, the board looks forward to 2019 with confidence and to another successful year of continued growth and delivering real returns for its shareholders.

This was the fifth consecutive year of growth in underlying earnings per share, free cash flow, and operating margins at Victoria - with challenging market conditions in the UK, confirming the value of diversifying our geographic exposure. We are confident there is further meaningful growth ahead of us from both ongoing organic improvements and efficiencies from our manufacturing capabilities and logistics and acquisitions. However, the benefits of the group's strategy to achieve scale through acquisitions is clear, with 2018 adjusted earnings per share up by 24.3% - despite our two acquisitions only contributing for part of the year.

‘We took advantage of challenging conditions in the UK to grow our market share by remaining very competitive on price. Initial pressures on margins arising from the decision, are being relieved by solid gains in production efficiency from the manufacturing reorganisation project and, together with our increased market share, have placed Victoria in very good stead for the months and years ahead.’