Wolseley builds on US and online growth

LEAMINGTON Spa building supplies group Wolseley UK has seen its revenue increase by 10.2% to £13.3bn (2014: £11.95bn) on the back of strong performance from its US operation Ferguson.

It has also seen impressive growth in the e-commerce area, which now makes up 13% of group revenue at £1.7bn.

But its results for the year ended July 31 showed profit before tax dipping from £676m in 2014 to £508m this year. The group will, though, point to an increase in its trading profit from £752m to £857m.

Net debt now stands at £805m compared to £711m in 2014.

The firm has recorded impairment and exceptional items of £242m (2014: credit of £1m) which includes the previously announced impairment charge of £234m relating to its Nordics operation.

During the period in question, Wolseley completed 18 bolt-on acquisitions with annualised revenue of £220m and says it has made good progress towards disposal of the French building materials business.
 
Chief executive Ian Meakins said: “The highlight of these results was another great performance by Ferguson in the US where we achieved strong like-for-like revenue growth ahead of the market and a 50 basis point improvement in the trading margin to 8.2%, which is a record.

“We continue to face some challenging markets in the rest of the group and remain focused on improving growth rates and protecting gross margins whilst keeping the cost base tight. 
 
“Wolseley continues to be highly cash generative and we have adequate resources to fund our capital investment programme, bolt-on acquisitions and growth in ordinary dividends. We are also announcing a £300m share buyback which reflects the group’s strong financial position and management’s confidence in the business.
 
“We expect to generate like-for-like revenue growth of about 4% in the first half.  In the US we expect continued good growth in Blended Branches, Waterworks, HVAC, B2C and Fire and Fabrication underpinned by decent commercial and residential markets.

“However, industrial markets in North America, which account for about 15% of revenue in the region, were challenging in the fourth quarter and we expect this to continue. 

“We expect a continued steady recovery in Nordic markets, although the heating market in the UK is expected to remain very competitive with little growth.  Overall, we expect to make continued progress in 2016.”