Resilient markets drive revenue spike at Wolseley

WARWICKSHIRE building products group Wolseley said revenue increased by 5% to £6.62bn on a like-for-like basis in the second half of last year.

In an interim management statement for the six months ended January 31, 2011, the firm posted a pre-tax profit of £195m.

Gross margin was 0.2% higher than last year at 27.7% despite challenging conditions, the company said, while a trading profit of £275m was 64% ahead of last year.

The group, whose UK operation is headquartered in Leamington Spa, reported good cash generation with adjusted net debt reduced by £262m since the end of July last year.

At its UK operations, whose brands include Bathstore and Plumb Center, revenue dropped slightly by 1% to £1.2bn while trading profit climbed from £33m to £51m.

Wolseley said there was an improved trading profit and operating leverage in all geographies.

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Chief executive Ian Meakins said: “This was a good first half performance, driven principally by resilient RMI markets and the considerable attention that we have paid to improving customer service, protecting gross margins and controlling costs.

“Construction markets have now broadly stabilised in most of our geographies, particularly the new residential and RMI segments in the USA.

“The overall macro-economic environment in several regions continues to be fragile and pricing competition remains intense.

“The impact of recent VAT increases and Government spending cuts leaves the outlook in the UK more uncertain.

“We continue to maintain our emphasis on protecting market share and gross margins while keeping a tight control on the cost base to maximise operating leverage.

“The group expects to continue to grow in the second half of the year, though the comparatives will now be much more demanding.

“The reinstatement of the dividend reflects the strength of our balance sheet and our confidence in the future trading prospects of the group.”