Carpet maker Victoria swings back into profit

Kidderminster company Victoria has revealed a dramatic swing back into profit in the wake of its string of takeovers over the last two years.

The deals have transformed the 120-year old company from a traditional carpet manufacturer into a floorings group, making underlay, tiles and wood floors as well.

The result has been revealed in today's half year figures, which show turnover has more than doubled as the company swung from last year's losses back into profit.

The company, which employs around 200 at its core Kidderminster factory in Worcester Road, is now the biggest flooring manufacturer in the UK and the second biggest in Australia.

Its figures for the six months to October 3 include contributions from takeover targets Abingdon Flooring and Whitstone as well as several months of earnings from Australian firm Quest Carpets and its most recent acquisition, underlay manufacturer Interfloor, bought for £65m in September.

The result is a turnover figure that has soared 164.5% to £105.6 million, while pre-tax profits have swing to a £3.25m profit from a £5.5m loss at the same point a year ago.

Victoria has also notched up a record half year underlying pre-tax profit before exceptional items of £5.9m.

Geoff Wilding, the chairman who took over Victoria following a bitter boardroom battle three years ago, said today: "I am pleased to report that the group continued to perform well during the period, growing both organically and through acquisition.

"The UK and Australian flooring markets continue to experience very good demand from consumers and we are already seeing a growth in earnings and further operational synergies from the two acquisitions made since the start of the year.

"Our strong positive cash-flow and tight control over costs, together with supportive bankers and shareholders, ensures that the group is well positioned for further growth as we continue to identify and explore acquisition opportunities. I am confident acquisitions will continue to be earnings enhancing and a useful tool to both strengthen the group and create wealth for our shareholders.

"Therefore I am pleased to say the board faces the balance of the financial year with positive sentiment."

This is despite a huge rise in the company's net debt, from £36.3m to £81.1m, largely to pay for its takeover spree. Mr Wilding said: "It is important shareholders appreciate that while net debt has increased, so have the group's earnings."

The group has also sold off its Yorkshire wool spinning mill, Westwood Yarns, which had been loss-making for a number of years and was, said Mr Wilding, unable to compete with Eastern European opposition. The company took a £1.46m loss on the sale, but it freed up capital to reduce debt, he said.

Looking ahead, Victoria reported that both its UK and Australian markets were continuing to perform well.

The UK represents 75% of its business, and Mr Wilding said rising consumer confidence, rising wages and low inflation were making households "more positive about their finances than they have been for the past nine years".