Victoria PLC (AIM:VCP) has upgraded full-year profit expectations after achieving record interim earnings, as revenues continue to be lifted by strong consumer demand for flooring products.
The firm said its Italian ceramic business has its full production output now sold out until the second quarter, something that’s never happened before, and management is figuring out how to increase capacity.
The UK logistics operation has market outperformance in Victoria's UK soft-flooring business, while the Australian arm is expected to contribute strongly in the second half once lockdowns end in October.
Victoria’s artificial grass business has also been doing well despite sharp price increases in the raw materials, as European consumers prefer local products rather than those imported from overseas.
The demand for flooring experienced this year has primarily come from existing homeowners redecorating, but the group reckons it will continue due to the high level of housing transactions seen in many of its markets.
Housing sales are a good 12-18-month leading indicator of demand for flooring, it added.
As for supply chain issues affecting several companies in different sectors, the flooring group has remained relatively immune so far, as it entered the current period with a higher than normal level of raw materials.
“We expect the strong demand to continue, particularly with the benefit from increased home moves yet to be experienced. We continue to believe that the company will outperform targets and see material upside to the shares,” analysts at house broker Peel Hunt said.
Shares rose 2% to 1,020p on Wednesday morning.