UK - Wolseley plc reported results for the first half of fiscal 2014. Revenue of the ongoing businesses is 5.2% ahead of last year including like-for-like growth of 3.2%. The company reported gross margin for the ongoing businesses of 28.2%, 0.4% ahead of last year, and the company's trading profit of the ongoing businesses is £360 million, 8.8% ahead of last year.
Wolseley saw headline earnings per share of 91.4 pence, 15.3% ahead of last year, and continued good cash generation with net debt of £927 million (2013: £871 million) after ordinary and special dividend payments of £476 million over the last year.
The proposed interim dividend is 27.5 pence per share, 25.0% ahead of last year, including a rebasing of 15% reflecting the Group’s strong and sustainable cash flows.
Operating and corporate highlights
- Good growth in the USA and UK and modest improvement in like-for-like growth in Nordics. Continued weakness in Central Europe and Canada.
- Decent flow-through of incremental revenue to trading profit.
- Trading margin for the ongoing businesses of 5.6%, 0.2% higher than last year.
- Two bolt-on acquisitions completed in the period with annualised revenue of £52 million. Previously announced acquisition of Puukeskus now completed.
- Good progress on investment in technology and processes to support the development of more efficient business models.
Ian Meakins, Chief Executive, commented:
“We delivered a good performance in our USA and UK businesses, achieving decent revenue growth and an improvement in underlying gross margins. We continued to face headwinds in Continental Europe requiring strong action on gross margins and costs to protect profitability. We have continued to invest in technology and processes to develop more efficient business models to support improvements in operational efficiency and to improve our trading margin, which is now up to 5.6 per cent for the ongoing businesses.”
“An attractive and sustainable dividend is an important element of shareholder returns and we have raised the interim dividend to 27.5 pence per share, 25 per cent ahead of last year reflecting our confidence in the continued strong cash generation of our business.”
Commenting on the outlook, Ian Meakins said:
“The like-for-like revenue growth rate in the USA since the end of the period has been in line with what the business generated in Q1, with the like-for-like revenue growth rate for the Group as a whole broadly consistent with the performance in the first half. We expect the Group’s like-for-like revenue growth rate for the remainder of the year to be about 4%.”
