The 2020 Mid-Year Economic Update_long

Ferguson Sales Up More than 20% in 1Q; Housing Market Hits Stock

Wolseley plc, global distributor of plumbing and heating products to the contractor market and a building materials distributor, reported group revenue was up by more than 15% in the first three months of its fiscal 2007, which includes 5% organic growth. Profit was up 9%. In constant currency, revenue and profit would have been higher by 4%.


For Wolseley’s North American operations including Ferguson, Stock Building Supply and Wolseley Canada sales in dollars were up more than 10% and profit up 5%.


Ferguson revenue and profit were both up over 20% from the prior-year period, and had double-digit organic growth.


At Stock, local currency revenue and profit were hit by the slowdown in the new residential market and by significantly lower lumber and structural panel prices. Housing starts in the U.S. have fallen from an annual rate of more than 2 million in October 2005 to under 1.5 million in October 2006, with significant regional variations.


Lumber and structural panel prices, which combined account for about 45% of Stock’s revenues, have fallen by 23% and 38% respectively. Including acquisitions, Stock’s revenue was up slightly but profit was down by around a quarter. Organic sales volumes were down by 6%.


To cut costs, Stock has laid off 10% of its workforce, or about 2,000 employees.


The RMI market in Canada has continued to grow, despite a slowing in housing starts and the overall economy in Eastern Canada. In local currency, Wolseley Canada reported modest organic revenue growth and a double-digit increase in profit compared to the prior-year period.


Europe revenues and profit increased by more than 30%. Excluding the acquisition of DT Group, revenues and profit were up by 20% and 10% respectively.

  • Wolseley UK: double-digit revenue growth and good levels of organic growth. Margins were slightly lower due to aggressive price competition and new branch openings.

  • France: Good levels of organic revenue and profit growth. Sales trends improving.

  • Central Europe: Each of the group’s businesses had positive revenue growth, despite most markets remaining broadly flat. Businesses in Switzerland and the Netherlands show good increases in profit.

  • Outlook
    Wolseley expects the housing market to continue softening in the U.S. into 2007, but with significant regional variations. Stock results should improve as housing starts and lumber/panel price comparators become more favorable and the benefits of the cost reduction program are realized. The RMI and industrial markets are expected to continue improving.

    Related Links:

    Stock Building Supply Buys Kempsville Building Materials
    Ferguson Acquires HVAC, Fire Sprinkler Distributors
    Hardly Scratching the Surface

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