LEAMINGTON SPA: Heating and plumbing giant Wolseley has seen revenues grow 5% in the first quarter from £3471m to £3641m, as strong growth in the US offset lower growth in some of its European businesses.
Trading profit was 16% ahead of last year at £185m, while the gross margin improved by 0.1% to 27.1%.
Highlights
Like-for-like revenue growth of 5%.
Gross margin of 27.1% was 0.1% ahead of last year.
Trading profit was 16% ahead at £185m.
Adjusted net debt of £587m, £118 m lower than 31 July 2011.
Sold Encon in the quarter, and completed the disposals of Build Center and minority stake in Stock Building Supply in November.
Completed two acquisitions in the quarter and one in November, in the USA, with aggregate annual revenue of £88m for consideration of £29m.
Commenting on the trading outlook, Ian Meakins, chief executive said: "Wolseley has continued to grow well, with strong growth in the US, offset by lower growth in some of our European businesses. Given continuing macro-economic uncertainty, trading conditions may get tougher in the coming months. We will remain vigilant on costs and continue to drive performance improvements, strong cash conversion and better customer service. Our balance sheet is strong and the Group is well positioned to continue to invest selectively where we can generate good returns."
First quarter trading performance
During the quarter the Group generated revenue of £3,641m, 5% ahead of last year. The gross margin of 27.1% was 0.1% ahead of last year, despite increasing pricing pressure. We have grown market share in the key regions and continue to implement initiatives to protect margins. Operating costs were £24m higher than last year, including the previously announced increases in employee share scheme expenses and pension contributions of £10m.
Head count remains in line with the year-end position and the Group remains on target to extract all residual costs within 12 months of the completion of disposals. Trading profit of £185m was £26m higher than last year including £5m of one-off credits, primarily from property disposals, and £3m from businesses sold or held for sale.
The Group also benefitted from an extra trading day in the US, UK, Nordics and Canada which contributed £7m of trading profit. Movements in foreign exchange rates added £29m (0.8%) to revenue and £2m to trading profit in the quarter.
Disposals
On 31 October 2011 the Group disposed of Encon, the UK insulation business, which generated revenue of £183m and trading profit of £5m in the year ended 31 July 2011. Cash consideration of £20m was paid on completion with a further £22m satisfied through the issue of loan notes repayable in 2016.
On 4 November 2011 the disposal of Build Center was completed as previously announced, and on 17 November 2011 the Group disposed of its remaining minority stake in Stock Building Supply for cash consideration of £15m.
