The 2020 Mid-Year Economic Update_long

Wolseley Year-End Sales Decline 10%

Wolseley announced it has written off its remaining investment in Stock Building Supply due to continued losses at the former subsidiary.

U.K.-based Wolseley, No. 1 on MDM’s list of top 40 industrial distributors, reported sales for the fiscal year ended July 31, 2010, were £13.2 billion (US$20.9 billion), down 9 percent from the prior year. On a constant currency basis, sales were down 10 percent.

The distributor of heating, plumbing, PVF and building materials in Europe and North America recorded a loss of £340 million (US$538.9 million), compared to a year ago loss of £1.17 billion.

“Demand across our markets remains mixed and the economic outlook continues to beUnclear,” said Ian Meakins, chief executive. “Revenue growth in the early part of the current financial year is similar to that seen in Q4 last year. We will continue to take actions that will strengthen the business and, whilst overall we remain cautious about the outlook for our markets, we are confident that Wolseley will make good progress in the year ahead.”

Due to ongoing losses at Stock Building Supply – in which Wolseley maintained a 44 percent interest after disposal through a joint venture in 2009 – Wolseley has written off the carrying value of £41 million.

During the first half, the group sold its business in Ireland and completed the previouslyannounced disposals of the Czech, Belgian and Slovakian plumbing and heating businessesin Central and Eastern Europe. In the second half of the year the Public Works business inFrance was sold for £7 million.

The Group disposed of the small Friosol business in Central and Eastern Europe for £3 million. Overall, the businesses disposed of in the year contributed revenue of £95 million and trading losses of £7 million and disposals improved Group profitability by £27 million. Since the year end, Brandon Hire in the UK was sold. Total cash consideration was £43 million, and in the year ended 31 July 2010, the business generated revenue of £70 million and a trading profit of £5 million.

By Region
Ferguson, Wolseley’s U.S. company, reported 2010 sales declined 11 percent to £5.17 billion (US$8.22 billion). During the fourth quarter, the company recorded like-for-like revenue growth for the first time in three years as new residential and RMI markets continued to recover. Trading profit was £239 million (US$380.2 million). U.S. sales account for about 39 percent of group revenue.

In Canada (6 percent of group revenue), sales were £765 million (US$1.21 billion), an increase of 9 percent, or a decline of 3 percent in constant currency. Trading profit of £41 million (US$65.2 million) was £9 million ahead of the prior year.

U.K. sales (19 percent of group revenue) declined 9 percent, primarily a result of disposals and branch closures during the year. Sales were £2.47 billion. Trading profit in the year of £91 million was £36 million ahead of the prior year, £23 million of which arose from the exit of the business in Ireland. RMI sector continues to experience gradual recovery, while commercial and industrial markets remained weak.

Nordic region sales (15 percent of group revenue) declined 8 percent in constant currency to £2 billion. Trading profit increased 4 percent to £100 million.

Sales in France (15 percent of group revenue) were £1.93 billion, down 10 percent (11 percent in constant currency). Trading profit was £30 million, down 6 percent.

Central and Eastern Europe sales (6 percent of group revenue) declined 11 percent (13 percent in constant currency) to £860. Trading profit improved to £10 million, from zero a year ago.

Corporate Changes
In addition to the earnings report, Wolseley announced Gareth Davis would succeed John Whybrow as chairman of the company, effective after the Annual General Meeting on Jan. 20, 2011. Whybrow will retire from the post he has held for eight years.

The company has also introduced a proposal to redomicile in Switzerland. If approved by shareholders, the new structure will take effect in November.

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