Wolseley, currently own by the Ferguson Group, has released a sombre annual report and financial statement for the year ending 31 July 2020.
In September 2019, the Group announced its intention to demerge the company into an independent entity. However the report states that "the timing of this remains uncertain due to the COVID-19 pandemic and its impasct on the stability of financial markets." The Group is exploring other divestment options in parallel to a demerger.
The Wolseley retirement scheme, which has over 15,000 pariticipants, is currently in a net deficit and has been closed to new entrants since 2009. However, the company anticipates that the plan will be transfered to another member of the Ferguson Group immediately prior to its separation from the Group.
Regarding the financial position of the company, the report states that the first lockdown significantly impacted trade. Most Wolseley branches remained open, providing "kerbside pick-up" facility only. Scottish branches were closed due to tighter regulations but the whole network was reopened by July 2020.
In response to the adverse economic situation the company embarked on a restructuring exercise costing £16 million. This meant the closure of one of its four distribution centres and of six under-performing branches (down to 520, with a further 22 operating as William Wilson). A redundancy programme to "protect the long-term profitability of the business" was also implementing, leading to a 12% reduction of the workforce (down by 352 employees to 4,957).
In August 2019, the company purchased gas metering products specialist Continental Product Engineering Ltd for £39 million to compliment its Infrastructure offering.
For the 12 months to 31 July 2020, revenue went down by 15.2% from £1.6 billion in 2019 to £1.4 billion with the majority of the £252 million decline taking place between March and July 2020.
Operating profit before exceptional items was £2.2 million compared to £43.8 million in the previous year, due to the loss of revenue arising from the pandemic. However, pre-tax profits increased from £26.6 million in 2019 to £79.9 million due to shareholding income received from two UK subsidiaries and the dissolution of the company's dormant French subsidiaries.
The majority of the total revenue (76.5%) was generatedy by the Residential and Commercial side of the business, its largest section.
Striking a circumspect note, the report points at continued uncertainties that could affect the business. In particuler, future tariffs and regulations, and volatility of the Pound generated by Brexit could adversely impact domestic demand and the supply chain.
It also notes that "market conditions remain highly competitive, and if not mitigated, could lead to increased downward pressure on sales prices and profit margins. There is a risk that such competitive pressures will increase and could be exacerbated by factors such as the arrival of new competitors, customer and supplier consolidation, manufacturers shipping directly to customers, and changes in technology."