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Wolseley Sells U.K.-based Bathstore

 

Wolseley Sales Increase 4.7% in Third Quarter

European distributor Wolseley reported sales for the third quarter ended April 30, 2012, were £3.2 billion (US$5 billion), up 4.7 percent over the same period a year ago. On a like-for-like basis, sales increased 3.8 percent. Trading profit was £141 million (US$220.3 million).

For the first nine months of the fiscal year, sales from ongoing operations were £9.4 billion (US$14.7 billion), a year-over-year increase of 6.3 percent. On a like-for-like basis, ongoing sales were up 4.6 percent. Trading profit was £451 million (US$704.8 million).

3Q Sales by Geography

In the U.S., like-for-like revenue growth in the third quarter was 9.4 percent and most of the key businesses continued to take market share. While Repair, Maintenance and Improvement markets were broadly flat, the modest recovery in new residential markets continued. The Blended Branches business generated strong like-for-like revenue growth and improved gross margins with profit strongly ahead.

The Industrial and Waterworks businesses also made good progress, benefiting from recent acquisitions and improving its trading performance. The Heating, Ventilation and Air Conditioning business also grew well although revenue and gross margins were lower reflecting the removal of government tax incentives for higher specification equipment. Overall U.S. trading profit of £95 million (US$148.5 million) was 19 million ahead of last year.

During the quarter, Ferguson acquired Reese Kitchens, Inc., Indianapolis, IN.

Revenue in Canada in the quarter grew by 7.9 percent on a like-for-like basis. The Industrial business continued to benefit from the oil, gas and mining sectors. Improving market conditions also benefited the Waterworks business although growth trends were slightly weaker in HVAC. Trading profit of £6 million (US$9.4 million) was £2 million ahead of last year.

Like-for-like revenue in the UK excluding last year's contract loss was 1.9 percent driven by Plumb and Parts Center despite weaker demand. Pipe and Climate Center and Drain Center performed well generating good growth. Headcount was 68 lower than at 31 January 2012 as we continued to focus on the cost base. Trading profit for the quarter was £26 million (US$40.6 million), £3 million ahead of last year due principally to lower bad debt charges. Operating expenses included £1 million of one-off restructuring charges.

In the Nordic region, like-for-like third-quarter revenue decreased by 1.7 percent. The seasonal pick up in new residential construction markets in Denmark was weaker than last year although the business continued to hold market share. Growth rates were also held back in Sweden and Finland in lackluster markets, though the businesses protected gross margins. In Norway demand was subdued although it continued to be underpinned by a strong oil and gas sector. Trading profit was £7 million (US$10.9 million) in the quarter, £8 million below last year.

During the quarter Wolseley completed the acquisition of a single branch building materials business in Denmark.

Like-for-like revenue in France declined by 6.1 percent as new construction markets weakened. Ending government stimulus activity may have an effect on activity levels going forward. Trading profit was £9 million (US$14.1 million) in the quarter, £6 million below last year and included £1 million of one-off restructuring charges.

In Central Europe like-for-like revenue was flat as price deflation on Euro sourced products in Switzerland constrained sales, but gross margins were ahead of last year. In Austria the business generated higher revenues and held gross margins in the period. Like-for-like revenue was flat in challenging markets in Holland. Trading profit of £5 million (US$7.8 million) in the quarter was £2 million below last year.

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