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Wolseley Revenues Up 26% in First Half of Year
March 21, 2006
Wolseley plc, London, group revenues increased more than 26% to $11.85 billion with trading profit up nearly 22% to $677.5 million, with the U.S. accounting for 59.3% of the revenues and 61.7% of the trading profit. The Group saw organic growth of 12.2%.
Wolseley's North American companies performed strongly, with reported revenues up more than 40% and trading profit up 39%.
Wolseley's U.S. plumbing and heating business, Ferguson, had overall sales growth of 37.8% to $4,530.5 million and organic growth of 27%. Profit growth was 29.5%. Ferguson's total branch numbers increased by 156 during the first half to 1,097 locations.
Stock Building Supply reported revenues up 27.2% at $2.5 billion (2005: $1.96 billion) with trading profit up 51.5% to $157.3 million. Organic revenue growth was 7.9%, reflecting some commodity price deflation in lumber and structural panels.
In Canada, the construction and housing markets remained strong with the buoyant energy sector in Western Canada helping sales in the industrial and commercial sector. Revenue increased by 14.9% in Canada. More than 11% of the growth was organic. Profit grew by 4.4%.
Wolseley outlined highlights from the first half:
Record first half results achieved, despite generally flat European markets and significant investment in the business to position Wolseley for continued growth.
Increased diversity of the business as the Group has expanded into distribution of electrical products and insulation materials, entered the Belgian market and increased its presence in installed services in the U.S.
European revenues up 7.6% but trading profit marginally down, reflecting the more difficult market environment in the UK and restructuring in France. UK and Ireland revenues up 9.3%, including 1.5% organic growth and trading profit up 5.9%.
Market outperformance in all of the Group's principal markets except France, mainly due to restructuring to accelerate future growth.
Acquisition investment of ﾣ436 million for 22 acquisitions completed in the first half, which are expected to add ﾣ701 million of revenues in a full year.
Outlook for Wolseley:
Market conditions in North America are expected to remain favorable and Wolseley's North American operations are expected to make good progress in the second half. This is against the background of an improving industrial and commercial market, a growing RMI market and a strong housing market, although the number of starts may show a small decline.
For Europe, overall, it is likely that trading profit for the second half will be broadly flat compared to the equivalent period in the prior year, reflecting the generally flat market conditions.
The UK business expects to see a gradual but steady improvement in the RMI and housing markets as the second half progresses.
The business improvement initiatives relating to information technology, supply chain, sourcing and procurement will continue as the Group pursues its double-digit growth targets.
The acquisition pipeline remains strong and the Group will continue to pursue opportunities for product and geographic diversity. Wolseley's finance director told the Financial Times, London, that the company 'still has the firepower and the appetite to do a big deal and we will continue to look.' The company also told FT it had plans to build out its industrial holdings, making its business less dependent on the U.S. housing market.