Wolseley sales under pressure amid falling profits

Shares in Plumb Centre owner Wolseley dipped 10 per cent in early Tuesday trading after the group reported a 25 per cent fall in annual profits.

The British company said it expected to generate like-for-like revenue growth of about 4 percent in the six months to end-January, down from a six-month forecast of 6 percent it gave in June.

Overall full-year group trading profits for ongoing businesses were 14% higher at £857 million, while like-for-like revenues grew 7.1%.

Mr. Meakins said the company expects “a continued steady recovery in Nordic markets, although the heating market in the U.K.is expected to remain very competitive with little growth”.

Chief Executive Ian Meakins said the weak spot in an otherwise strong USA market was its industrial business – including oil and gas, mining and power generation – which accounts for about 15 percent of revenue in the region.

However, bottom line pre-tax profit fell by a quarter to £508m, largely as a result of a £234m writedown in the value of underperforming operations in Denmark, Finland and Sweden.

Trading margin for the ongoing businesses up 10 basis points to a record 6.4%.

The profit figure was hit by a one-off charge of £238m, mostly related to the write-down of assets at its Nordic business.

Continued strong growth and record trading margin of 8.2% in Ferguson (US). “In the USA we expect continued good growth in Blended Branches, Waterworks, HVAC, B2C and Fire and Fabrication underpinned by decent Commercial and Residential markets”, he said. Wolseley also it saw an improved performance in the Nordics, where it remains focused on restoring profitability.

During the year Wolseley made 18 bolt-on acquisitions with annualised revenue of £220m.