UK sales help Wolseley’s performance

A SLOWING housing market, low consumer confidence and the credit crunch are taking their toll on Wolseley – the world's largest specialist trade distributor of plumbing and heating products.

But although poor performance by the company's US operation has caused a 12% downturn in group profit, its European division remained stable reporting a 25% increase in revenue and a 15% rise in trading profit for the three months ended October 31.

Revenue for Wolseley's UK and Irish businesses increased by around 5%, the majority of which was organic growth.

Trading profit was up by a similar amount, despite a reduction in trading profit in Ireland. The overall trading margin improved marginally on the equivalent period in the prior year.

Wolseley, which has its UK headquarters, contact centre and distribution warehouse in Ripon, near Harrogate, said that a slowdown in the UK housing market and increased cost of mortgage financing was a concern, but that with demand outstripping supply and continued government investment, it remained confident.

Its North American division has not fared so well forcing the company to make a series of job cuts, which will total more than 3,000.

However, Wolseley's efficiency review has increased its operating cash flow, which more than doubled compared to the same period last year.

Further acquisitions and a strong balance sheet also stand the firm in good stead despite the growing global effects of the credit crunch.

Chip Hornsby, group chief executive of Wolseley said:

“The group continues to take swift and decisive action in the more challenging business conditions.

“Although sales trends and outlook are uncertain, we remain committed to our strategy. While keeping a tight control on costs will will continue to invest to create competitive advantage.”

He added: “We remain confident that with our size, scale and financial strength we will emerge from this slowdown as a stronger competitor with an excellent platform for future growth.”