Wolseley sees profits jump

Plumbers merchant group Wolseley has reported a 28% rise in first-half profits.

Pre-tax profits for the Plumb Center and Parts Center parent company rose to £250m in the six months to the end of January compared with £195m in the same period the previous year.

Turnover rose 5% to £6,84bn, although much of this was down to the US, which accounts for 45% of revenue.

The UK, which represents 15% of sales, fell 3%, while growth across Europe was mixed, with countries like Denmark, the Netherlands and Switzerland hampering growth elsewhere.

Gross profit was £1,876m, up 2% on the previous year 1,833 +2%.

The group reports that the UK business made considerable progress in replacing the volumes represented by last year’s major supply-contract loss and, adjusting for this factor, like-for-like revenue was 2% ahead of last year.

Underlying operating expenses were 4% higher, with staff costs being well controlled as headcount was reduced by 179. Trading profit for the ongoing business of £44 million was £4 million behind last year although this included £3 million of non-recurring restructuring charges.

Plumb and Parts Center achieved a good performance in lacklustre markets and increased gross margins despite strong competition. Pipe and Climate Center and Drain Center both continued to perform very well, generating good growth and continuing to take market share.

The underlying trading margin for the ongoing UK business was 5.5% (2011: 5.6%).

Ian Meakins, the chief executive, said: “We will continue to pursue operating efficiencies and remain focused on improving customer service, gaining market share and protecting our gross margins. We will continue to invest selectively in the business where we can exploit growth opportunities and generate good returns.”

The sale of Brossette, the French plumbers merchant to Saint-Gobain is expected to be completed shortly; the sales of Build Center to Saint-Gobain and Encon to a management buy-out have already gone through.

Wolseley shares, which have risen 18% since August last year, fell 2.7%.