Victoria profits suffer after fall in demand

It now expects underlying earnings before tax will be approximately £160 million – below the level achieved in 2022-2023.

The group, which now has its headquarters in Worcester, also expects revenue will be lower than the previous year but broadly in line with market expectations.

Victoria has cut 1,170 employees since starting a reorganisation 18 months ago.

It has recently started a share repurchase programme and intends to invest up to £25m buying its ordinary shares of 5p each, using some of the group's non-operating cash flow from the sale of non-core and surplus assets.

Victoria says market demand is down by around 20 per cent and continues to be soft in Europe where 39 per cent of group revenue is generated.

Measurable progress has been made with the group's various reorganisation and integration projects resulting in substantial permanent overhead reductions and productivity gains.

These projects should materially improve future operational performance whilst maintaining production capacity

The sale of non-core and surplus real estate and other assets is progressing with net proceeds of more than £26m already received and a further £42m expected.

Executive chairman Geoff Wilding said: "There has been a lot of noise around Victoria in the last six months. To their enormous credit, operational management simply put their heads down and forged ahead with the integration projects designed to maximise the available synergies within the group and optimise cash generation in a challenging macro-environment.

"The pace and rigour of this work has accelerated in the last 90 days, with a larger cost incurred in the current year but a clear impact on future earnings and cash flow. We emphasise that we are not expecting some immediate improvement in flooring demand. However, we are confident of the impact on earnings and cashflow of management's actions and are certain demand will inevitability revert to the long-term mean."

Group chief executive Philippe Hamers added: "It has been a busy 18 months for the operational management teams with execution of various synergy projects. These include the relocation of Balta's carpet manufacturing and logistics to the group's existing UK facilities, relocating much of Balta's rug production to a newly expanded factory in lower-cost Turkey, and introducing new IT systems to improve operational decision-making and financial reporting. We have also initiated a project for the full integration of ceramics production to optimise productivity, and acquired new warehouse and distribution facilities in the US to improve customer service, improving inventory management, and consolidation of raw material procurement.

"These actions, some of which have been extended and remain ongoing, have allowed production capacity to be maintained with 1,170 fewer employees."