Wolseley Sales Increase 5% in First Half of Fiscal 2011

Global HVAC, plumbing and building materials distributor Wolseley plc, Zug, Switzerland, reported sales for the six months ended Jan. 31, 2011, were £6.63 billion (US$10.6 billion), an increase of 5 percent in a year-over-year comparison. Profit was £133 million (US$212.4 million), compared to a loss of £220 million (US$351.4 million) for the same period a year ago.

"This was a good first half performance, driven principally by resilient RMI markets and the considerable attention that we have paid to improving customer service, protecting gross margins and controlling costs," Chief Executive Ian Meakins said. "Construction markets have now broadly stabilized in most of our geographies, particularly the new residential and RMI segments in the USA. The overall macro-economic environment in several regions continues to be fragile and pricing competition remains intense."

By Region
Sales in the U.S. (41 percent of group revenue) were £2.68 billion (US$4.28 billion), an increase of 13 percent in the first half of fiscal year 2011. Organic sales growth was 9 percent. Growth was broadly based, supported by price inflation of 3.5 percent with all of the major business units generating growth. In December, Wolseley completed the acquisition of a waterworks distributor with three locations in Alabama and Missouri.

In Canada (6 percent of group revenue), sales increased 15 percent (6 percent organic) to £408 million (US$651.6 million). Overall, the growth rate declined in the first half as the Canadian economy cooled, following rises in interest rates and weakening consumer sentiment. Housing starts fell back slightly, although overall activity levels appear to be stable.

Revenue of £1.22 billion (US$1.95 billion) in the UK (19 percent of group revenue) was slightly lower as a result of disposals, while like-for-like revenue was up 6 percent in the period as markets improved.

In the Nordic region (15 percent of group revenue), sales were £1.02 billion (US$1.63 billion), up 3 percent over the same period a year ago. Like-for-like revenue growth was 4 percent, helped by 2 percent price inflation. The market in Denmark, the largest revenue generator in the region, remained weak with low levels of construction activity and poor consumer confidence continuing to impede any meaningful recovery. In contrast, the building materials businesses in Sweden, Finland and Norway benefited from better markets, with Finland performing the strongest.

Sales in France (13 percent of group revenue) were £888 million (US$1.42 billion), down 5 percent from sales in the first half of fiscal year 2010. Organically, sales increased 2 percent, primarily due to price inflation. New construction markets continued to recover although weak consumer confidence affected RMI markets.

In Central Europe (6 percent of group revenue) total sales of £414 million (US$661.2 million) were 8 percent lower than last year (3% decline on a like-for-like basis) with the decline arising from a continued focus on margin management and the exit of unprofitable business.

Disposals
At the start of the period, Wolseley disposed of Brandon Hire in the UK which generated revenue of £70 million (US$111.8 million) and a trading profit of £5 million (US$8 million) in the year ended 31 July 2010.

Since the half year end, the plumbing and heating business in Italy was sold for a debt and cash free valuation of £29 million (US$46.3 million). In 2010, the business generated revenue of £124 million (US$198 million) and made a loss of £9 million (US$14.4 million) and, in the first half of 2011 the business generated revenue of £53 million (US$84.6 million) and made a loss of £1 million (US$1.6 million).