The 2020 Mid-Year Economic Update_long

Wolseley Acquires Five More Distributors

prior year.

The strong sales growth in the period reflects high single digit organic volume growth and the benefit of acquisitions, partly offset by a 2% net reduction due to changes in lumber and structural panel prices.

Commodity lumber prices, which directly affect approximately 33% of Stock Building Supply’s product range, were 8.2% lower. For the 5 months to 31 December 2005, average lumber prices of $369 per thousand board feet compare with $402 per thousand board feet in the prior comparable period. Structural panels, which directly affect a further 13% of Stock Building Supply’s product range, increased 3.2% to $415 per thousand square feet, compared to $402 per thousand board feet in the prior period.

European Distribution
In European Distribution, sales in the five months to 31 December 2005 in sterling, including acquisitions, were up by around 5% compared to the same period in the prior year.


 


Wolseley plc has acquired five more distributors in Europe and North America for a total of about $25 million in cash. The global plumbing and HVAC distributor has acquired 22 distributors total this year.


 


North American Acquisitions


In November 2005, Ferguson acquired South Tahoe Plumbing. S. Tahoe distributes plumbing and HVAC equipment primarily for the residential market from a single branch in South Lake Tahoe, CA. In the year ended 31 December 2004, S. Tahoe had sales of $1.6 million and had gross assets of $0.5 million.


 


In January 2006, Ferguson acquired the assets of Colgan Distributors Inc. and


Colgan Cabinets Inc. Colgan distributes heating, ventilation and air conditioning (HVAC) products and residential cabinets in Louisiana. In the year ended 31 December 2004, Colgan had sales of $11 and had gross assets of $3.7 million.


 


European Acquisitions
In January 2006, PBM in France acquired Charpentes Calonge and Bigmat Boismat. CC fabricates roof trusses and other traditional timber frameworks and is based in southwest France. In the year ended 31 December 2004, CC had sales of Euro2.5 million and had gross assets of Euro0.8 million. Boismat is a builders’ merchant operating from three branches in the Loire region of France. In the year ended 31 December 2004, Boismat had sales of Euro7.1 million and had gross assets of Euro2.9 million at that date.


 


Also in January, Tobler in Switzerland acquired Friosol from PanGas. Friosol is a distributor of pipes, valves, fittings (PVF), insulation and gases for the refrigeration and air conditioning markets. In the year ended 31 December 2004, Friosol had sales of CHF11.4 million (5.0 million) and had gross assets of CHF3.9 million (1.7 million) at that date.



Update on Financials


The Group’s results for the first five months to 31 December 2005 show a strong increase in sales and profits driven by high rates of organic growth in North America and recent acquisitions.



After currency translation and including the effect of acquisitions, Group sales for the five months to 31 December 2005 were up by about 25% and profit up by about 20% on the same period in 2004.

The Group’s trading margin for the five month period is slightly lower than the equivalent period in the prior year primarily due to commodity price gains last year as well as the impact of acquisitions and additional investments in the business to position the Group for further growth.


 
North American Plumbing and Heating Distribution
In the U.S., housing related activity has been strong, with the repairs and remodelling market benefiting from the positive economic environment. The commercial and industrial sectors continue to improve.

The plumbing operations have performed strongly with sales for the five months to 31 December 2005 up by more than 35% and profit up by around 30% on the equivalent period in the prior year. The majority of the sales growth was organic. The slightly lower trading margin is in line with internal targets and reflects the absence of commodity price gains, the management focus on achieving strong organic growth in selected markets and the decision to continue to increase the investment in people, logistics and new branch openings.

In Canada, the construction and housing markets remain strong. In local currency, Wolseley Canada achieved a double-digit increase in sales and trading profit was very slightly down compared to the equivalent period in the prior year as a consequence of on-going investment in people and regional supply centers.

U.S. Building Materials Distribution
In Building Materials, sales were up by more than 20% for the first five months and trading profits up by more than 40% compared to the equivalent period in the

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