Shares in Victoria Plc plunged on Wednesday after the flooring distributor delivered a "cautious" outlook about ongoing subdued market conditions, while debt swelled to over £1bn.
Underlying revenues totalled £528.7m over the six months to 27 September, down 7% from £568.8m the year before, though the 11% decline seen in the first quarter had eased to just 2% in the second.
An improvement in margins helped underlying EBITDA rise to £53.5m from £50.2m. However, the underlying loss before tax increased to £15.4m from £13.6m previously.
The company said that flooring volumes across its core markets are some 20-25% below the long-term trend, according to industry estimates.
"Normalisation of demand would therefore imply a volume uplift of more than 25% from current levels. We express no firm view as to the timing of this recovery, only confidence that it will happen and that, in the meantime, we continue to execute internal initiatives to drive earnings," Victoria said.
The stock was down 18.3% at 30.65p
Commenting on the results, analysts at Berenberg in a research note that "investor focus [...] remains very much on the debt position and the capital structure."
Victoria said that net debt, including IFRS16 lease liabilities, swelled to £1.0bn by the end of the half, up from £897.9m at the end of the previous fiscal year, driven by costs associated with refinancing and FX changes.
"Victoria continues to have significant debt exposure that has required careful management. No further announcements relating to the debt structure or refinancing were provided today," Berenberg said.