Resilient Australian market boosts Victoria's profits

15th Jun 2011 14:49

Carpet manufacturer Victoria's full year profits rose, bolstered by a strong performance in Australia, which proved to be a resilient market once again, while the company's key UK market finished the year on a robust note.For the year ended 2 April, Victoria's revenue rose 12% to £70.5m from £62.9m a year earlier. Pre-tax profit surged to £1.92m from £1.09m.Revenue in the UK rose 9% due to the successful new product introductions made in the latter part of the first half-year, including the new generation of synthetic carpets.With a sluggish housing market and a fragile operating environment in the UK, customers have tightened their purse strings and reduced discretionary spending on big ticket items like home furnishing and floor coverings. "We are expecting trading conditions in the year ahead to be tough, with raw material price increases remaining a challenge. Consumers are cautious about the future and their confidence is still at a low level; therefore discretionary spending is likely to stay under pressure on big ticket items, including carpets," the company said in its statement. Victoria declared a final dividend of 6.0p, up 11.1% from 5.4p last year, bringing the total dividend for the year to 9.0p, an increase of 12.5% over the prior year.Broker Merchant Securities, which rates the shares a "buy", said the figures were ahead of expectations."We expect the market to upgrade 2012 earnings from 17.9p. The stock trades on a historic 2011 PER [price/earnings ratio] of 14.6x. The earnings ratio fails to take into consideration the strong balance sheet (Tangible Net Asset Value = £39.4m), which exceeds the current market capitalisation," analyst Amisha Chohan said.AR