Wolseley proposes special dividend as profit jumps

Published:  02 October, 2012

LONDON: Wolseley has posted a 10% rise in full-year profit, underpinned by growth in its core US business, and proposes a special dividend of £350m.

Wolseley, which operates the Plumb Center and Ferguson chains in the UK and the United States, said trading profit or the year to end July was £658m.

Chief executive Ian Meakins said today: "Wolseley continues to be highly cash generative and we have adequate resources to fund future investment in the business alongside growth in ordinary dividends."

Group revenue rose 5.4% to around £12.7bn, as 8% like-for-like growth in its core US market helped ease the pain of struggling markets in Continental Europe, including France where the group is considering a number of options including sale.

Wolseley's UK business sales fell 1% with demand in the heating market declining throughout the year. "There is no evidence yet of improving market conditions and therefore growth will only come from market share gains in the short term," Wolseley said in its statement.

Price inflation was approximately 1%. The major business units of Plumb and Parts Center, Pipe and Climate Center and Drain Center gained market share.

"Despite strong competition and some copper price deflation, the ongoing gross margin was well ahead of last year due to favourable sales mix and a sharp focus on pricing and procurement," the company said.

Operating expenses were 3% higher including £4m of restructuring costs. Staff levels reduced by 321 to 5913. Trading profit for the ongoing business of £92m was £3m ahead of last year after restructuring charges.

"Plumb and Parts Center achieved a good performance in lacklustre markets and increased gross margins despite strong competition. Pipe and Climate Center continued to perform well, generating good growth and higher trading profits. Activity levels in Drain Center slowed in the second half and the business protected gross margins. On 1 August 2012 we launched our six consumer internet business for the UK market www.tapoutlet.co.uk using the infrastructure of our successful Build.com business in the USA," the company said.

The trading margin for the UK business was 5.5% (2011: 5.3%).

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