Norcros' Upcoming Dividend: A Closer Look

Norcros plc (LON:NXR) is set to pay a dividend of £0.035 per share, representing a significant cut from the previous year's £0.10 payout. This change has raised questions about the company's future dividend growth potential and the impact on its earnings and cash flow.

The reduction in Norcros' dividend can be attributed to a combination of factors. In the year ended 31 March 2023, the company's underlying operating profit declined by 13.2%, and its net debt increased to £49.9m. These factors, coupled with a high dividend payout ratio of 3,333.33%, suggest that the company may have been distributing a significant portion of its earnings to shareholders, potentially impacting its ability to reinvest in growth.

The upcoming dividend represents a 1.41% yield, a substantial decrease from the previous year's 4.13% yield. This change has led to a significant increase in the dividend payout ratio. In 2023, the payout ratio was 73.33%, but it has now risen to 3,333.33%. This increase indicates that the dividend is now being funded by retained earnings rather than current profits, raising concerns about Norcros' ability to sustain this dividend in the long term.



Despite the dividend cut, Norcros' recent financial performance shows signs of recovery. The company reported a 11.3% increase in revenue and a 13.2% increase in underlying operating profit in the year ended 31 March 2023. These figures suggest that the company has the earnings capacity to sustain its dividend, although shareholder vigilance is required to monitor the company's cash flow situation and its ability to maintain this dividend in the long term.

Norcros' strategic initiatives, such as portfolio development, organic growth, and operational excellence, could present opportunities for shareholders if successfully executed. However, the company operates in challenging markets, particularly in South Africa, and share price volatility may pose risks to shareholders.



In conclusion, Norcros' upcoming dividend payment of £0.035 per share represents a significant reduction from the previous year's payout. This change has raised concerns about the company's future dividend growth potential and the impact on its earnings and cash flow. While the company's recent financial performance shows signs of recovery, shareholders should monitor the company's cash flow situation and its ability to maintain this dividend in the long term. The success of Norcros' strategic initiatives and the company's ability to navigate challenging markets will also play a crucial role in determining its future dividend growth potential.