Stronger US revenues help offset weak Eurozone demand for Wolseley
STRONGER first quarter sales in the US and Canada have compensated weakened domestic and Eurozone demand for Midland-based plumbing and heating group Wolseley.
The Leamington Spa group said the period saw it generate revenue of £3,325m, 2.1% up on the same quarter last year, while trading profit was up 7.6% to £198m (2011: £52.3m). Continued strong cash generation helped to reduce debt levels to £87m (2011: £523m).
The group’s US region saw revenue growth of 7.1%, while in Canada there was a 3.1% rise over the period.
However, the weakened Eurozone markets have seen the company implement a £33m restricting programme to try and alleviate the impact of the depressed region.
“We have grown market share in key regions and continue to implement initiatives to protect gross margins which were in line with the same period last year despite continued pricing pressure,” it said in its Q1 update.
The period saw the group make two acquisitions in the US for a total consideration of £80m; while after the end of the three months, it also purchased 22 Burdens branches in the UK; a deal that is steal awaiting Office of Fair Trading.
Revenue in the UK is said to be in line with last year. Demand remained weak in the heating market and this was reflected in slightly lower gross margins. Headcount was 148 lower than in July and operating expenses were lower as it continued to focus on operating efficiency. Trading profit was £24m, up £1m on last year.
Ian Eakins, Wolseley chief executive, said: “Wolseley has continued to generate good growth in the USA and Canada though revenue has declined in Continental Europe as a result of continuing tough market conditions, particularly in the Nordics and France, and unfavourable currency movements.
“Improvements to customer service continued to drive market share gains in our largest business units. In the current macroeconomic environment we are working hard to protect gross margins and to drive further operating efficiencies to protect profitability. Cash generation is a key focus and the strength of our balance sheet provides opportunities to invest selectively where we can generate good returns.”