Wolseley bolstered by strong US trading
LEAMINGTON Spa building supplies group Wolseley has enjoyed a strong third quarter after a marked improvement in its US trading division.
Revenues were up more than 8% in the USA during the period, helping to contribute to an overall boost of 10.8% across the whole group. Group trading profit for the period was up 17.9%.
Group revenue totalled £3,658m (Q3 2015: £3,301m), with trading profit at £230m (Q3 2015: £195m). Gross margin was ahead of last year at 28.4%.
Nevertheless, the group is maintaining its cautious stance.
It said demand in several of its markets remained subdued and it continued to experience the adverse impact of commodity deflation, particularly in the US.
Like-for-like revenue growth in the weeks since the end of the quarter has been 1%.
“We have committed to further restructuring in the UK and Europe bringing the total expected costs for the full year to about £20m. We expect trading profits for the full year, before restructuring costs, to be in line with analyst expectations at current exchange rates,” it said in a Q3 update.
The company will no doubt be raising a glass to toast US customers as none of the group’s other regions performed anywhere near as well – with the UK (-0.4%), the Nordics (-2.6%) and Central Europe (-0.2%) all down.
Commenting on the results, Ian Meakins, Wolseley’s chief executive, said: “Wolseley generated decent revenue growth in the third quarter in mixed market conditions and against continued deflationary headwinds.
“The commercial and residential markets in the US held up well and we achieved good volume growth, though this continued to be partly offset by weaker Industrial markets and the ongoing impact of commodity price deflation which reduced the US growth rate by 2.3%.
“The UK heating market continued to be challenging and we continue to take actions to protect profitability. In the Nordics, after an encouraging first half, construction markets were more challenging in the third quarter. Recent revenue growth trends have been weaker and we have continued to manage costs and productivity very carefully while driving better customer service and strong cash conversion.”
