Gaining ground again.
Rollercoaster week for Wolseley
Published: 01 October, 2009
LEAMINGTON SPA: During the past week national merchant Wolseley announced that the downturn has hit the company with an annual loss of £766m.
Today, the company's better stance on bad debts...
has seen its shares jump 11% after the world's biggest supplier of heating and plumbing products also said a decline in profits will slow next year.
Shares in Wolseley climbed 3.3%, supported by a Citigroup upgrade on the plumbing supplies group to 'buy' from 'hold' as the broker cited opportunities for the company in the US and a better balance sheet.
The results would have been far worse, said analysts, had it not been for the £1.6bn boost to revenues in North Amercia from currency conversions.
Wolseley has had to take drastic action: during the year it has had to axe 10 000 jobs and raise £1bn.
Citigroup said Wolseley's valuation factors in too little recovery, given that housing and public spending in the US should now be close to the bottom.
The broker also added that service and stock availability are at more of a premium than before, which will benefit major players.
Citigroup added that Wolseley's balance sheet is ready for acquisitions and that it believes the company could buy good businesses at attractive multiples.