Strong US market continues to bolster Wolseley

STRONG growth in the United States is continuing to bolster Warwickshire-based building products group, Wolseley.

In the three months to October 31, 2016, US revenues grew 8.9% at constant exchange rates to £2,945m, compared with £2,256m for the corresponding period last year. In contrast, the group’s other regions saw a combined decline of 1.8% (at constant exchange rates) to £1,424m.

Overall, total revenue growth was 5.2% to £4,369m (£3,556m). Trading profit was up 1.4% at constant exchange rates to £303m (£250m).

In the UK, revenue was down 2.1% at constant exchange rates to £499m (£510m), with trading profit declined by £2m to £17m, compared with £19m in the corresponding period last year.

A subdued heating market is thought to be a primary factor in the performance, while repairs, maintenance and improvement markets remained weak.  

The group announced in September that it would be cutting 800 jobs in the UK as it looked to offset the decline. It said consultations with the workforce were now underway, as was the development of a turnaround and repositioning strategy.

Revenues in the Nordic region were down 2.5% at constant exchange rates to £582m (£503m), with trading profit showing an 18.6% decline to £24m (£25m).

Figures for Canada and Central Europe were relatively flat, showing a 0.3% decline to £343m (£287m) at constant exchange rates.

Commenting on the results, Wolseley chief executive John Martin said: “US like-for-like revenue growth was 4.2% with commercial and residential markets continuing to grow well and industrial markets steadying.  

“Good volume growth was partly offset by the ongoing impact of commodity price deflation which reduced the US revenue growth rate by 2.4%.  Our other markets were more challenging as the UK heating market was weak and Nordic construction markets deteriorated.  While revenue growth trends have improved slightly we continue to manage costs and productivity very carefully while continuing to drive customer service and strong cash conversion.”

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