Wolseley pushes ahead with sales and profit

Plumbers merchant group Wolseley plc announced this morning (October 2) that sales at ongoing businesses rose 5.4% over last year in the 12 months to July 31 2012.

Wolseley pushes ahead with sales and profit

Total revenue for the year was more-or-less flat, however, at £13.4bn (2001 £13.5bn). Trading profit was £658m, 10.4% ahead of last year, though this includes a £17m restructuring charge, the group having completed the disposals of Build Center, Brossette, Encon, Bathstore and Wolseley’s residual stake in the US heavyside business Stock Building Supply.

The trading margin for the ongoing businesses was 5.2%, 0.3% higher than last year, although the overall gross margin was 27.5%, 0.2% below last year.

Chief financial officer John Martin said in the analysts’ presentation that the group made “decent progress in challenging markets”.

“We continue to work hard on productivity. Despite strong headwinds in the UK market, we replaced £70m of lost sales on one particular contract business, taking share in a declining heating market.

“The UK market was very competitive, with a lot of price pressure, but we improved gross margins and spent £4m on restructuring following the disposals of certain of our businesses.”

Chief executive Ian Meakins, Chief Executive, said: “In terms of the markets we compete in, the US remains reasonable, Canada is robust while the UK market remains pretty difficult. The Nordics continue to decline, although at a constant rate. France is in decline.” He said that the group is currently evaluating its businesses in France.

“In summary we made decent progress again. We have had to fight very hard to keep gross margins up. We know that we can operate businesses better and are looking at ways of generating better business models that allow us to meet our customers’ needs better.”

Meakins said that the UK market share growth has been built on better service, later cut off times, and better availability. “As the incentives for boiler replacements dropped off we have seen the market decline sharply but we see the Government’s Green Deal as a real opportunity. We know that our customers will require support to access this so that is why we have become a Green Deal Provider.

“Plumb & Parts Centers have been restructured around 85 larger branch networks which act as a hub with the smaller branches around them. We want to regain clear market leadership.

“We know that after range and availability, knowledgeable branch staff is the next most important aspect.

“If our prices and service are not competitive our customers will source commodity products from non-traditional routes. We believe if we stay ahead of our competition our customers will remain reliant upon us.

“There are threats out there but still huge opportunities.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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