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"The overall trading environment continues to be extremely tough and we remain firmly focused on driving operational performance," Group Chief Executive Ian Meakins said. "At the same time, we are making good progress in evaluating our businesses to prioritize future investment."
Global market conditions are expected to remain challenging, particularly in the Industrial and Commercial segment while New Residential and RMI markets are expected to continue to move towards stabilization.
During the first three months of fiscal year 2010, restructuring costs of £10 million (Wolseley UK £5 million, North America £3 million, France £1 million and Central and Eastern Europe £1 million) were incurred and charged against trading profit.
In North America, first quarter sales were down 17% compared to the corresponding period in the prior year. Trading profit was down by 44%, reflecting lower profitability in Ferguson and the one off property profit in the prior year. On a constant currency basis, revenue and trading profit were 24% and 49% lower than a year ago.
Ferguson experienced a further decline in the Commercial and Industrial market due to continued shortage of funds for project financing available. However, most of the residential markets are showing increasing signs of stabilization. Revenue in local currency for the three months decreased 26% and underlying trading profit excluding property profits for the quarter was down around 47%.
Local currency revenue for Wolseley Canada decreased by around 16% with trading profit down around 33% due to the lower level of sales and a lower gross margin.
Revenue for Europe was down by around 10% in the three months ended Oct. 31, with trading profit down by around 23%. On a constant currency basis revenue and trading profit declined by approximately 16% and 30% compared to the corresponding period in the prior year.
While revenue for the UK and Ireland decreased by about 13%, trading profit excluding £5 million of restructuring costs was up by around 17%, due to the benefits of cost reduction actions in the prior year. Signs of stabilization increased in the Residential and RMI markets in the UK, and the rate of decline in the Commercial and Industrial market has slowed. The Irish market continues to be extremely challenging, although the rate of trading losses has stabilized and is broadly in line with the corresponding period in the prior year.
The Nordic region reported revenue, in local currency down around 19% with trading profit down around 14%. In France, revenue in local currency for the quarter was down by 17%.
Revenue in Central and Eastern Europe (C&EE), in local currency was down around 16% with trading profit down around 33%. Wolseley recently completed the disposal of the Belgium and Slovakian Lightside businesses. The disposal of the Czech Lightside business is also underway and is expected to be completed in the next few weeks.