Wolseley Builds Hope Of Exceeding Profits
Huddersfield Daily Examiner (Huddersfield, England), May 15, 2010
BUILDING and heating supplies firm Wolseley highlighted an upturn in fortunes – as it revealed it was on course to beat profit expectations.
The group, which has Build Center and Plumb Center branches in Huddersfield as well as a Bathstore outlet in the town, said most of its markets were continuing to stabilise.
Wolseley shares jumped by 8% in a weak market as investors welcomed the firm’s prediction that it expected to exceed current City forecasts for profits of pounds 374m in the year to July 31.
It reported like-for-like revenues growth in the UK and Canada during the quarter to April 30 and said new residential and repair and maintenance markets were expected to continue to improve.
Chief executive Ian Meakins said: “Demand across the markets in which we operate remains mixed though most markets continue to stabilise.”
Overall, profits for the third quarter of the company’s financial year were more than double last year’s total at pounds 101m.
Profits in the UK were pounds 31m compared to pounds 13m for the same quarter a year ago.
Total UK revenues declined by 5% to pounds 625m in the quarter, but the figure was 4% higher on a like-for-like basis as the company built on the progress seen since the summer of last year.
This has been driven by the plumbing and heating businesses – as trends in the building materials sector have yet to show a return to growth.
Wolseley recently identified its UK Build Center chain as one of 19 businesses earmarked for potential sale.
As part of the review by Mr Meakins, who joined the company last year, Wolseley will seek to improve the performance of the businesses before deciding whether to put them up for sale.
In the USA, revenues were down 10% to pounds 1.3bn – but the fall on a like-for-like basis was limited to 4%.
The company has kept a tight grip on its cost base, having cut 1,900 jobs in the first half of its financial year – including 745 in the UK. That comes on top of the 10,000 staff shed the previous year. It employs 47,000 people in 25 countries.
Collins Stewart analyst Imran Akram said the latest figures showed “very encouraging” trends, helped by ongoing cost-cutting measures.
He revised his profits estimate from pounds 352m to pounds 406m and upgraded the broker’s recommendation on the stock from sell to hold.
CAPTION(S):
* PIPING HOT: Plumb Center owner Wolseley has pleased City analysts