Wolseley Sales Up 8.5% in 2016 - Modern Distribution Management

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Wolseley Sales Up 8.5% in 2016

U.S. revenue increased 13.4 percent year-over-year.

UK-based Wolseley plc, parent company of Ferguson Enterprises, reported full-year sales of £14.4 billion (US$18.7 billion), an 8.5 percent increase over the same period a year ago. On a like-for-like basis, sales were up 2.4 percent.

Trading profit increased 7 percent to £917 million (US$1.2 billion). 

“Ferguson, our core U.S. business which generates over 80 percent of the group’s trading profit, performed well and achieved good growth in residential and commercial markets, partly offset by weakness in industrial markets,” said John Martin, CEO of Wolseley. “Commodity deflation, principally in the U.S., reduced the group’s growth rate by 1.5 percent. Ferguson continues to be the main priority for organic expansion and bolt-on acquisitions”

U.S. business sales, including Ferguson, were up 4.1 percent from last year to £9.5 billion (US$12.3 billion) on a like-for-like basis. On an actual basis, sales were up 13.4 percent and acquisitions contributed an additional 1.9 percent. 

Trading profit in the U.S. was up 13.5 percent to £775 million (US$1 billion).

Residential and commercial markets grew well, though industrial markets, which accounted for 12 percent of revenue, contracted throughout the year. Despite deflationary headwinds Blended Branches, Waterworks, HVAC and Fire and Fabrication generated good growth and gained market share. Industrial revenues declined as activity levels remained weak, particularly in the major oil producing states.

Build.com also continued to grow very strongly throughout the year, and e-commerce accounted for 19 percent of Ferguson’s revenue.

Thirteen acquisitions were completed during the year, with a total annualized revenue of £183 million (US$237.5 million).

In the final quarter, Wolseley acquired Michigan Meter Technology Group, a Waterworks business, Michigan Pipe and Valve, a pipe valves and fittings distributor, and Bruce Rogers, a plumbing, heating and air-conditioning equipment distributor

Since the year end, the company has also acquired Signature Hardware, a Kentucky based online private label kitchen and bathroom retailer, and Westfield Lighting, an Indianapolis based lighting company, with annualized revenue of £92million (US$119.4 million).

Sales in the UK declined 1.6 percent compared to the prior year on a like-for-like basis, with acquisitions contributing an additional 2.7 percent.

During the year the company closed 21 branches and associate numbers were 4 percent lower. As part of its restructuring, the company plans to close around 80 branches and one distribution center which will lead to up to 800 job losses, the impact of which the company plans to minimize through redeployment and attrition as far as possible.

Sales in the Nordics region were up 0.6 percent on a like-for-like basis. Market conditions in Denmark weakened in the second half of the year and demand remained weak in Finland.

Canada & Central Europe
Like-for-like sales in Canada and Central Europe decreased 1.1 percent compared to the prior year, due to the impact of the strengthening of the U.S. dollar on imports to Canada, partially offset by commodity price deflation in Central Europe.

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