Victoria PLC sees EBITDA margin rebound in FY2025 as flooring recovery gathers pace

Victoria PLC (LSE: VCP), a global leader in flooring manufacturing and distribution, has forecasted revenue of at least £1.11 billion for the financial year ended March 29, 2025. The Group also reported that the fourth quarter was its most profitable of the year, significantly outperforming the same period in FY2024. Post-IFRS 16 EBITDA margins are expected to be broadly in line with market consensus.

This improvement follows a prolonged period of margin compression across the European building materials sector, where raw material inflation, energy cost volatility, and a deceleration in residential construction weighed heavily on earnings. Victoria’s return to margin expansion reflects a focused execution of “self-help” initiatives designed to streamline operations, reduce overheads, and restore cash flow discipline. These strategic moves have mirrored wider industry efforts, with global players like Tarkett and Mohawk also pivoting toward internal efficiencies as housing-linked demand plateaued globally in 2023 and early 2024.

What Business Lines and Markets Are Driving Victoria PLC’s FY2025 Performance?

Victoria PLC, founded in 1895 and listed on AIM since 2013, operates across more than 30 sites globally with its headquarters in Worcester, United Kingdom. The company’s diversified portfolio spans carpets, ceramic tiles, luxury vinyl tile (LVT), artificial grass, underlay, and accessories. Victoria is Europe’s largest carpet and underlay manufacturer and ranks second in carpet production in Australia.

The company’s geographic footprint extends across the UK, Spain, Italy, Germany, the Netherlands, Belgium, Turkey, the United States, and Australia. Its global employee base of approximately 5,600 workers underpins this expansive operational reach. In FY2025, the Group’s UK operations recorded consistent monthly improvements in like-for-like revenue from January through March, demonstrating early traction in profitability recovery and reflecting better-than-expected domestic demand for flooring and renovation materials. This rebound is particularly significant considering the persistent weakness in post-pandemic home improvement cycles and the ongoing rebalancing of consumer spending across Europe.

How Do Victoria’s Self-Help Measures Compare with Industry Benchmarks?

Victoria PLC’s internal restructuring strategy is consistent with broader industry norms in the building products space, where earnings volatility over the last two years has forced firms to rethink cost structures. The company has made strides in workforce optimisation, improved automation, and better alignment of production across its international network. These efforts have led to a steady sequential recovery in EBITDA margins throughout FY2025.

While Victoria has not yet disclosed full-year EBITDA or net profit figures, management noted that the fourth quarter’s profitability was significantly stronger than the comparable quarter last year. These gains reflect operational reforms that have already been executed, including rationalisation of low-margin SKUs and efficiency initiatives across logistics and procurement. This dual strategy of organic improvement and bolt-on acquisitions mirrors the playbook Victoria used successfully in the pre-COVID expansion cycle, which helped it scale its European and Australian operations rapidly between 2016 and 2021.

What Is the Impact of U.S. Tariff Policy on Victoria’s Global Trade Exposure?

Victoria has addressed the ongoing uncertainty surrounding U.S. trade policy, particularly potential changes in tariffs on imported flooring products. Management stated that approximately 80% of the Group’s revenue is generated outside of the United States, limiting the company’s direct exposure to any policy shifts from Washington. Additionally, Victoria highlighted that the U.S. flooring market currently lacks sufficient domestic manufacturing capacity to meet demand, making imports an indispensable component of industry supply.

While acknowledging that tariffs could impact sentiment and competitor pricing strategies, the company pointed out that many rival suppliers operate from countries more likely to attract higher import duties. This scenario could improve Victoria’s relative competitiveness in the American market. Despite this potential advantage, the Board is maintaining a cautious stance, citing the unpredictability of secondary impacts such as consumer pullback and promotional discounting by larger global peers. The approach reflects prudence and aligns with broader commentary in the industry, including from U.S.-based Interface, Inc., which has also flagged exposure to evolving trade headwinds.

What Is the Status of Victoria PLC’s Refinancing Efforts?

One of the central developments highlighted in Victoria PLC’s update is the progress on refinancing discussions. Management indicated that talks are well advanced and continue to evolve positively. Refinancing is a critical component of the Group’s near-term strategy, as the business has historically carried elevated debt due to its acquisition-driven growth model.

A successful outcome could materially improve liquidity, extend maturity profiles, and reduce interest burden—especially relevant in the current macro backdrop, where central banks in the UK and eurozone are signalling the possibility of policy rate cuts later in 2025. Improved access to credit and restructured financing would provide Victoria with greater financial flexibility, enabling continued investments in self-help initiatives and potentially reigniting its M&A engine once balance sheet headroom is restored.

How Is the Market Reacting to Victoria PLC’s Latest Guidance?

On May 9, 2025, Victoria PLC shares closed at 78.00p, reflecting a daily decline of 1.27%. Despite this dip, the stock is trading more than 110% above its 52-week low of 37.00p. However, it remains significantly below its 52-week high of 243.75p, reflecting a broader recalibration of valuation across mid-cap UK industrials.

Analyst sentiment has shifted modestly toward a more neutral to cautiously optimistic outlook. Technical indicators, which previously flagged bearish momentum, have moved into Hold or Accumulate territory, with price targets converging around 152.50p. This suggests a potential upside of nearly 95% from current levels if execution remains on track and refinancing proceeds as expected. The improved guidance, paired with tangible Q4 margin recovery, has helped stabilize investor confidence after a turbulent 2023–2024 period for the stock.

What Are Institutional Investors Doing with VCP Shares?

Institutional ownership in Victoria PLC has seen a noticeable decline in the most recent quarter. The number of institutional holders fell by 36.84%, and overall institutional shareholding dropped 39.12% to approximately 9.59 million shares—equivalent to 8.37% of the company’s outstanding equity. This retreat likely reflects portfolio rotation trends in the UK equity market, with institutional capital increasingly flowing into high-growth technology or defensive sectors amid persistent industrial volatility.

However, the recent Q4 margin beat and positive refinancing commentary could attract renewed institutional interest if the company demonstrates sustainable free cash flow growth and balance sheet improvement. For now, sentiment among larger shareholders remains cautious, but a clear pivot toward stable cash generation could reverse outflows in the coming quarters.

Buy, Sell, or Hold: What’s the Investment Outlook on Victoria PLC?

Victoria PLC’s investment case remains balanced, with improving fundamentals offset by macro uncertainty and historical leverage. Investors with a high-risk tolerance may view the stock as undervalued, particularly given its discounted valuation relative to historic EBITDA multiples and the potential for refinancing to unlock value.

For those already holding the stock, staying invested through the next 6–12 months could be sensible, provided the company continues delivering operationally and avoids adverse tariff fallout. Conservative investors, however, may prefer to wait on the sidelines until refinancing is finalised and interest coverage improves, especially given the broader pressure on UK small and mid-cap stocks.

What Lies Ahead for Victoria PLC in FY2026?

Victoria PLC enters FY2026 with clear strategic priorities and measured optimism. The company expects to benefit from a full-year run rate of productivity improvements achieved in FY2025, lower financing costs from anticipated interest rate reductions, and continued margin expansion via its internal optimisation programs. Management’s guidance remains deliberately cautious due to external trade risks, but internal performance metrics suggest strengthening fundamentals.

The next fiscal year will also be pivotal in determining whether Victoria can reclaim its role as a consistent compounder in the global flooring space. If refinancing progresses successfully and trade exposure remains manageable, the company may be well positioned to reinitiate M&A discussions and broaden its geographic reach once again.