Ferguson ponders pulling the plug on Wolseley float amid revenue fall

Specialist plumbing and drainage merchant Wolseley UK saw turnover fall from £1.6bn to £1.4bn for the year to July 31 2020,. At the same time, parent company Ferguson plc says demerger plans “remain uncertain in the current economic environment” and that the board is looking at other ways of separating the businesses “in parallel with progress towards the demerger to facilitate the exit of the Wolseley UK business”.

150520 J Tye AB Wolseley 2 368

The company reports that the Covid-19 pandemic significantly impacted trade during the lockdown from March 2020, although most of the branches were able to operate on a click and collect basis, with the exception of branches in Scotland.

Total revenue decreased by 15.2% to £1.403bn; most of the fall occurring from March to June. Operating profit was £2.2m, before exceptional items, down from £43.8m.

As a result of the pandemic, Wolseley UK reduced its headcount by about 12 per cent “to protect the long-term profitability of its business”.

At the same time, Ferguson released a trading update for the first quarter which saw revenue grow by 5.2% in the UK with organic growth of 1.2% and inflation broadly flat in the quarter. Gross margins were slightly lower due to product mix but underlying trading profit was ahead of last year.

The board reports that the business continues to benefit from refocusing on a clear customer proposition and targeted sales initiatives combined with recent restructuring actions to significantly improve the cost base and focus the business on operational efficiencies.

At 31 July 2020, the company operated from about 520 sites, down from 529, with a further 22 operated by William Wilson, a subsidiary.

The average number of employees reduced by 352 during the year to 4,967.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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