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VCPLN Gives Poor Trading Update

CONSUMER CYCLICALS
Flooring products mfg, Victoria PLC , launches buyback (~15% of FY EBITDA guidance) while flagging lower earnings

  • Not great news here for the VCPLN 26/28's (B2/B+/BB+) - they are mixed this morning and already trade wide (10.9%/12.7%)
  • Company says market is still down ~20% with soft conditions in EU, stable in UK & Aus & improving demand in US. Still cites labour inflation as headwind. Net sees FY24 revenue in line with market expectations (bbg c at £1.3b vs. £1.5b last yr) & sees EBITDA of £160m (c£187m).
  • Its committing to a £25m share buyback (£282m outstanding) which it sees "deferring achievement of board's leverage goal by less than 1 quarter" - it generally has had a leverage target of 3-3.5* on EBITDA - which its broken above in 1H24 (3.8*) - on poor earnings.
  • Its mentioned its paid down €11.1b of 26's (at avg. 21% discount to par) and has a target of buying another ~€14m. It also sees sale of RE and other assets bringing in another €50m (on top of €31m already).
  • Above does little to dampen poor EBITDA guidance this morning - leverage could push above 4* now.
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