Victoria PLC

For H1, revenue was down about 7% and EBITDA improved by just over GBP 3 million to GBP 53.5 million, with EBITDA margin at 10.1%. Management said gross margins were consistent, while underlying margin improvement was 390 basis points excluding last year’s GBP 6.7 million favorable gas hedging benefit and the Rugs reorganization disruption. Net debt was just over GBP 1 billion, leverage was 8.6x, and the company said it was free cash flow positive before CapEx and reorganization at GBP 8 million for the half. Cash cost from refinancing was GBP 20.5 million, cash tax was GBP 7 million, and CapEx in H1 was about GBP 25 million. Guidance-wise, the company reduced annual CapEx to GBP 50 million to GBP 55 million from about GBP 65 million previously, and said it has GBP 40 million of working capital savings targeted plus GBP 20 million-plus of additional property sales over the next 18 months. It also said the Rugs move should be fully operational by the end of fiscal Q1 next year, with the majority of benefit in FY27, and H2 EBITDA for that business broadly breakeven.

Geoffrey Wilding struck a constructive but cautious tone, saying the macro environment remains difficult for consumer discretionary spending, but the company is focused on what it can control: margins, costs, cash generation and deleveraging. He said Victoria is now more confident about the future than at any point in the last couple of years because of operational changes that should support earnings growth next year. He also emphasized that the company believes the flooring recovery will come with housing transactions and consumer spending normalization.

Alexander Pratt highlighted that revenue was down about 7% in H1, but EBITDA still rose to GBP 53.5 million and margin expanded to 10.1% despite lower volumes. He pointed to free cash flow positive performance before CapEx and reorganization at GBP 8 million, and said the period included GBP 17 million of interest cost, GBP 7 million of cash tax, GBP 25 million of CapEx, and GBP 20.5 million of refinancing cash costs. He also noted net debt of just over GBP 1 billion, leverage of 8.6x, GBP 86 million of cash on the balance sheet, and access to about GBP 187 million of local lines. On capital allocation, he said CapEx is being cut to GBP 50 million to GBP 55 million annually, with GBP 40 million of working capital savings targeted and GBP 20 million-plus of smaller asset sales planned.

Analysts focused on the competitive landscape, the Koch relationship, the Balta restructuring, CapEx intensity, and whether weak volumes could be structural. Management said UK carpet demand is still being supported by Alliance’s next-day logistics and that recent sales trends improved from late October through early December; it also said there is no evidence of a structural demand break in the UK market. On Koch, management described the relationship as very supportive and said Koch has helped with working capital, while noting the conversion rights could reduce liabilities and strengthen the balance sheet if exercised. On Balta, management said the move to Turkey is under control, 170 employees have already exited, about 90% of production will be in Turkey, and the new setup should lower costs and improve productivity.