Wolseley sees mixed fortunes at half year

Wolseley, parent company of Plumb Center, Parts Center and Burdens, posted a net loss of £58m for the six months to January 31, thanks in part to its Nordic businesses.

Pre tax profit fell to £102m from £312m compared with the same period in 2014 after the group took a £245m writedown on the Nordics business stemming from its £1.3bn purchase of DT Group in 2006.

However, total revenue from ongoing businesses grew 10.3% to £6.44bn, trading profit rose 12% to £390m and like-for-like revenue in the US rose 11.7% to £3.92bn. Three-quarters of Wolseley’s business comes from the US; the performance was boosted by bolt-on acquisitions and good growth from residential, commercial and industrial markets.

Housebuilding volumes helped push UK revenues up by 1.9% on a like-for-like basis though this was countered by a 1.5% fall in revenues from the Central European businesses, particularly Finland and Sweden

Ian Meakins, chief executive, said: “The Group delivered a good trading performance and the ongoing trading margin improved by 20 basis points to 6.1%. This was driven by the USA where all of our businesses strongly outperformed their markets and we achieved a record 7.9 per cent trading margin. We generated better like-for-like revenue growth in Europe, despite challenging markets, as we invested in sales and marketing activity to stimulate demand. We are taking action to improve profitability in Europe in the second half.”

“We continued to make good progress in our ongoing investment programme to improve the efficiency of our business model. This remains a key component of our strategy to enhance customer service, whilst driving sustained market outperformance and margin expansion.”

“Cash generation was good and our balance sheet remains strong. Growth in headline EPS of 13.3 % has enabled us to increase the interim dividend to 30.25 pence per share, 10 % ahead of last year.

“We expect the Group’s like-for-like revenue growth rate in the second half to be about 6%. At current exchange rates, we expect Group trading profit for the ongoing businesses for the full year to be in line with the current consensus of analyst expectations. ”