European distributor Wolseley plc reported sales from continuing operations for the first quarter ended Oct. 31 were £3.5 billion (US$5.7 billion), up 7.4 percent over the same period a year ago. On a like-for-like basis, sales were up 3.5 percent.
Trading profit from continuing operations grew 9 percent to £218 million (US$356.4 million).
“Wolseley has continued to generate good revenue growth in the USA and the UK, although like-for-like revenue declined in the other countries as a result of continued tough market conditions," Wolseley Chief Executive Ian Meakins said.
The company expects trading conditions to "remain tough" for the foreseeable future, as there are no signs of improvement in market conditions across Continental Europe.
Ferguson, Wolseley's U.S. business, reported first-quarter sales of £1.8 billion (US$2.9 billion), up 10.3 percent over a year ago. On a like-for-like basis, sales grew 7.6 percent. Trading profit increased 16.3 percent to £142 million (US$232.2 million). Most segments generated revenue growth and improved returns, but the industrial segment remained weak.
In Canada, sales fell 4 percent to £237 million (US$387.5 million). Like-for-like revenue in Canada was down 0.6 percent. Market conditions in Quebec remained weak, but this was largely offset by continued growth in the West. Gross margins were ahead of last year, but due to unfavourable foreign exchange movements, trading profit declined by £1 million to £17 million (US$27.8 million).
In the UK, sales climbed 13.1 percent to £483 million (US$789.7 million). Like-for-like revenue increased 4.3 percent. New residential construction and RMI markets grew but industrial markets remained weak. The acquisition made last year contributed a further 8.5 percent to revenue growth. Gross margins excluding the acquisition were broadly in line with the same period last year. Trading profit for the period was £25 million (US$40.9 million), £1 million (US$1.6 million)ahead of last year, held back by excess bad debt charges of £2 million (US$3.3 million).
In the Nordic region, sales grew 1.7 percent to £541 million (US$884.5 million), but like-for-like revenue declined 2.6 percent. Market conditions remained particularly difficult in Finland and continue to be challenging in Denmark. Gross margins were somewhat lower in the period due to pricing pressure. Favorable foreign exchange movements contributed £2 million (US$3.3 million)to trading profit, which was still down £6 million (US$10 million)to £28 million (US$45.8 million). In light of continued poor market conditions, the company announced that further cost reductions will be implemented in the Nordic region.
In France, sales grew 1.4 percent to £144 million (US$235.4 million), but like-for-like revenue declined by 4.8 percent due to continued weakness in the new residential market. Gross margins were lower than last year and operating costs were reduced significantly. Trading profit improved by £2 million (US$3.3 million)due to the reduction in costs.
In Central Europe, sales grew 4.4 percent to £235 million (US$384.2 million), butlike-for-like revenue declined by 2.9 percent. Overall gross margins were ahead of last year. Trading profit was held flat compared to the same period last year at £14 million (US$22.9 million).