Global HVAC, plumbing and building materials distributor Wolseley plc reports there are no signs yet of any upturn in the U.S. housing market; it is also seeing the repairs, maintenance and improvement market starting to soften. A weaker dollar and price deflation in lumber and panels has also hurt its North American building materials business.
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In its preliminary results report for the year ended July 31, 2007, Wolseley had sales of 16.2 billion pounds (US$32.7 billion), up 14.6% from the previous year. Operating profit fell slightly.
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North American revenues declined slightly overall, reflecting slow sales by Stock Building Supply hit by the weak U.S. residential market. Ferguson, the plumbing/HVAC business, had 5.5% organic growth. Operating profit in North America was down 19% due to Stock’s lower profitability and the effect of currency translation. Ferguson’s trading margin of 7.2% is a record for the business.
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Wolseley expects the commercial and industrial market to remain positive, albeit at lower rates of growth.
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Revenue growth of 46.8% in Europe included 31.4% from the acquisition of DT Group and 8.8% organic growth. Operating profit was up 36.9%, of which 31.4% was DT Group. Trading margin was lower, reflecting restructuring charges in UK and Italy.
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France saw a 10.3% increase in local currency revenue and 13.1% in operating profit, with Brossette achieving 1 billion euros of revenue for the first time.
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Central and Eastern Europe had a 22.4% increase in revenue, including 11.7% organic growth.
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A total of 638 new branches have been added during the fiscal year. Bolt-on acquisition investment was 379 million pounds for 43 acquisitions completed, which are expected to add 671 million pounds of revenues in a full year. This is in addition to the acquisition of DT Group completed in September 2006.