Wolseley Organic Sales Up 5% in 1Q

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Trading profit – defined as operating profit before exceptional items and the amortization and impairment of acquired intangibles – grew 16 percent year over year to £185 million (US$288 million).

"Given continuing macroeconomic uncertainty, trading conditions may get tougher in the coming months," Chief Executive Ian Meakins said. "We will remain vigilant on costs and continue to drive performance improvements, strong cash conversion and better customer service. Our balance sheet is strong and the Group is well positioned to continue to invest selectively where we can generate good returns."

During the quarter, Wolseley disposed of Encon, the UK insulation business, which generated revenue of £183 million (US$284.9 million) and trading profit of £5 million (US$7.8 million) in the year ended 31 July 2011. In November, the distributor completed the disposal of Build Center and sold its remaining stake in Stock Building Supply.

Two acquisitions in the U.S. were completed during the period: SG Supply, Chicago, IL, and Louisiana Chemical Pipe, Valve & Fitting, Baton Rouge, LA.

Geographic Results
U.S. first-quarter sales of £1.5 billion (US$2.3 billion) grew 11 percent year over year. Organically, sales grew 10 percent. Trading profit increased 24 percent to £99 million (US$154.1 million).

U.S. Residential and RMI markets remained flat, while the Blended Branches business generated strong like-for-like growth. The Industrial and Waterworks businesses also demonstrated solid progress, while growth in the Heating, Ventilation and Air Conditioning business was weaker reflecting the expiration of government tax incentives in December 2010.

Canada grew by 2 percent on a like-for-like basis, with sales of £235 million (US$365.9 million). Blended Branches and HVAC improved their performance. The Waterworks businesses was lower largely as a result of the removal of government stimulus incentives. The Industrial business continued to benefit from the buoyant oil, gas and mining sector and made good progress. Trading profit of £17 million (US$26.5 million) was £1 million (US$1.6 million) ahead of last year.

Like-for-like revenue in the UK declined 3 percent to £591 million (US$920.1 million). Excluding the impact of the contract loss last year, like-for-like growth was 1 percent as Plumb and Parts Center worked to replace lost business in weak construction markets. Trading profit for the quarter was £24 million (US$37.4 million), £6 million (US$9.3 million) below last year.

In the Nordic region, like-for-like revenue increased by 2 percent to £623 million (US$969.9 million). Denmark and Norway outperformed Sweden and Finland. Trading profit of £39 million (US$60.7 million) increased 11 percent.

Like-for-like revenue in France grew by 3 percent to £455 million (US$708.4 million). New construction markets weakened in the period. Trading profit was flat year over year at £2 million (US$3.1 million).

In Central Europe, like-for-like revenue in the ongoing business grew by 1 percent to £206 million (US$320.7 million). Trading profit of £14 million (US$21.8 million) in the quarter was £2 million(US$3.1 million) ahead of last year.