Builders and plumbers’ merchant group Wolseley increased sales by 6% in the third quarter to end-April.
Group sales were £3.271bn, with trading profit 30% ahead at £131m and gross margin, at 28%, 0.2% ahead of last year.
Operating costs were £19m lower than last year.
Despite continued pricing pressure, Wolseley said focus on improving customer and product mix led to a higher gross margin of 28% in the quarter, 0.2% higher than last year.
Operating costs were £19m lower, principally as a result of disposals, though the underlying cost base in constant currency increased by 2.8% compared to last year.
Revenue in the UK fell by 4%, though like-for-like revenue was 1% ahead of last year, mainly due to the disposal of Brandon Hire in September 2010. Revenue in Plumb Center and Parts Center suffered from the loss of a large national supply contract at the end of March 2011, although gross margins improved. In addition, the comparative figures included the benefits of the Government’s boiler scrappage scheme which ended in March 2010. Drain, Pipe and Climate Centers all performed well in the period.
Build Center continued to make progress improving its trading performance, benefiting from a lower cost base and a focus on higher margins. Bathstore continued to face challenging market conditions, with revenue significantly lower than last year. Trading profit for the quarter was £28 million, £3 million below last year, due to adverse bad debt charges which were £4 million higher than last year.
In the USA revenue was 2% ahead of last year and like-for-like revenue growth was 10%, the difference predominantly arising from weakening of the US dollar. Trading profit of £76m was £18m ahead of last year.
Canada’s revenue declined by 2% although it was flat on a like-for-like basis. The growth rate has declined over the year and market conditions remain challenging. Trading profit of £4m was £3m behind last year.
In the Nordic region revenue increased by 8%, 6% on a like-for-like basis. Trading profit of £15m was £4m ahead of last year.
Revenue in France grew by 2% though this represented 8% growth on a like-for-like basis, the difference being mainly due to the weakening of the euro. Trading profit was £15m in the quarter, an increase of £7m.
In Central Europe revenue was flat on a like-for-like basis and 15% lower than last year on a reported basis as a result of the disposal of Italy in February 2011. The continued focus on gross margins and the exit of unprofitable business resulted in a strong improvement in trading profit to £7m in the quarter.
Ian Meakins, CEO, said: “The Group continued to make progress in the third quarter broadly maintaining the revenue growth trends achieved in the first half despite tougher comparatives. New residential construction, which accounts for 20% of Group revenue, remained subdued in most regions, while demand in repair, maintenance and improvement (RMI) segments held up well in most markets.
“Like-for-like revenue growth continues to be strongest in the USA, with positive momentum in the Nordics and France offset by weaker trends in the UK and Canada. We continue to maintain our emphasis on protecting market share and gross margins whilst keeping a tight control of the cost base. Management remains confident of meeting our expectations for the full year.”