Victoria PLC Posts H1 Loss Amid High Debt but Reports Progress on Cost Savings and Refinancing

Victoria PLC H1 FY26: Lower revenue, higher margins, and a chunky statutory loss

Victoria PLC has posted a resilient but mixed half-year to 27 September 2025. Underlying revenue fell 7% to £528.7 million as demand across core markets remains 20-25% below long-term trend, but underlying EBITDA rose to £53.5 million with margin up 120bps to 10.1%. That improvement came from cost discipline and pricing, offsetting weaker volumes.

On the flip side, statutory numbers are still ugly due to one-off items. The Group reported a statutory operating loss of £44.7 million and a statutory net loss after tax of £139.4 million, driven by exceptional costs for the Rugs restructuring and refinancing charges. Underlying free cash flow improved but was still an outflow at £8.1 million.

Key metric	H1 FY26	H1 FY25
Underlying revenue	£528.7m	£568.8m
Underlying EBITDA	£53.5m	£50.2m
Underlying EBITDA margin	10.1%	8.8%
Underlying operating profit	£11.4m	£7.7m
Statutory operating loss	£(44.7)m	£(140.8)m
Statutory net loss after tax	£(139.4)m	£(141.7)m
Underlying free cash flow	£(8.1)m	£(13.8)m
Net debt incl. IFRS-16 leases	£1,003.9m	£857.1m
Net debt / underlying EBITDA	8.6x	7.4x
Cash, net of overdrafts	£86.6m	not disclosed

Quick jargon check: “Underlying” excludes exceptional and non-underlying items to show trading performance, while “statutory” includes everything. EBITDA is earnings before interest, tax, depreciation and amortisation. Leverage of 8.6x is net debt divided by underlying EBITDA.

Cost savings and refinancing: real progress, one-off pain

Management is running a twin-track plan: shore up the balance sheet and lift earnings through self-help. The refinancing has been completed for 2026 maturities and, across FY2026 so far, more than £700 million of financing has been raised. There are no short-term senior debt maturities now, though the 2028 Senior Secured Notes of €167 million still need addressing.

The price of that progress has been high. One-off refinancing costs totalled £58.7 million in the period, contributing to the statutory loss. On the operating side, Victoria has removed more than £20 million from its cost base this period, over £30 million in the last two years, and is executing towards a total £70 million annual EBITDA improvement versus FY25 when fully delivered. Underlying EBITDA margin rose 120bps to 10.1%, and management says excluding Rugs and prior-year hedging effects, the margin uplift would be about 390bps.

Debt, leverage and liquidity: the elephant in the room

Net debt including leases is now £1,003.9 million, up £106.0 million since year-end, reflecting refinancing costs and FX translation. Leverage sits at 8.6x underlying EBITDA. Preferred equity is also significant, with a carrying value of £289.4 million and a hypothetical redemption value of about £347 million.

Liquidity looks adequate for now with £86.6 million cash and roughly £100 million further undrawn capacity permitted under bond documentation. Working capital was flat in H1 and is a clear lever from here.

Divisional rundown: UK carpets resilient, Rugs relocating, Europe ceramics mixed

UK & Europe Soft Flooring: margin up, Rugs down

Revenue was £274.2 million and EBITDA rose to £28.6 million, margin 10.4% (9.0%). The core UK Carpets and Underlay business delivered £29.9 million EBITDA at 15.9%, a 4.1ppt jump, helped by integration and market share gains despite industry volume contraction.

Rugs is the swing factor. The relocation of production from Belgium to Turkey is underway and causing disruption, with H1 EBITDA of £(1.3) million on revenue of £86.7 million. A £40.9 million provision has been taken. Cash costs of the reorganisation are expected to be c.€50 million spread over FY26-FY28, largely offset by property disposals. Management expects H2 Rugs EBITDA to be broadly breakeven, with profitability targeted in FY27.

UK & Europe Ceramic Tiles: pruning low-margin sales, V4 line online

Revenue fell to £134.7 million and EBITDA to £17.1 million, margin 12.7% (12.9%). Excluding last year’s gas hedging benefit, margins improved by 4.2ppts. Spain is showing growth and better margins, and the new €30 million V4 production line was commissioned in November. At full capacity, it is expected to add circa €15 million of annualised EBITDA.

Australia: steady with better margins

Revenue was £50.6 million and EBITDA £7.3 million, margin 14.4% (13.2%). Integration of three operating businesses under one holding company is underway to drive further efficiencies. Interest rate cuts are expected to support H2 demand.

North America: softer revenue, improved profitability

Revenue declined to £69.2 million due to FX, but EBITDA improved to £3.5 million, margin 5.1% (3.1%). The CALI business continues to pivot towards B2B and premium products, and tariffs are being managed operationally.

Cash, capex and asset sales: tightening the screws

Operating cash flow before interest, tax and capex improved to £33.5 million. Underlying free cash flow outflow reduced to £8.1 million. The Board is pulling three levers to bolster liquidity over the next 18 months:

• Capex trimmed to £50-55 million per year near term, down from £60-65 million, with maintenance at c.£40 million and modest expansion of £10-15 million excluding Rugs transfer capex.
• Working capital improvements targeted at £40 million through overdue payments reduction, inventory optimisation, and better payables terms post-refinancing.
• At least £20 million of surplus asset disposals, in addition to Belgian properties tied to the Rugs reorganisation.

Outlook and why it matters

The Board remains cautious on the near-term outlook. Management expects underlying EBITDA to be broadly in line with FY25 despite lower revenue, excluding one-off Rugs transition costs. Demand is still depressed, particularly in France, Germany and the US, and Rugs’ relocation is a temporary drag. The prize is on the other side of the cycle: if volumes normalise from today’s 20-25% below trend, Victoria could see a >25% uplift, and with more operating leverage in place, margins could expand towards management’s mid-to-high teens ambition.

My take: this is a classic turnaround-in-progress. The good – tangible margin gains, capex discipline, and a clear self-help pipeline including the V4 line and UK integration. The bad – leverage at 8.6x, cash out on refinancing, and execution risk in Rugs. The necessary next step is a clean solution for the 2028 notes and continued delivery on the £70 million EBITDA uplift plan. If demand recovers, the operational torque is meaningful. Until then, it is all about execution and cash.

What to watch next

• Delivery of H2 margin improvement and whether Rugs exits FY26 at breakeven as guided.
• Working capital release and progress towards the £40 million target.
• Capex discipline holding at £50-55 million per annum.
• Any movement on refinancing the 2028 Senior Secured Notes (€167 million).
• Ramp-up of the V4 line in Spain and its EBITDA contribution trajectory.