Wolseley Cuts Branches, Headcount Despite Sales & Profit Growth

The company reduced headcount in the U.K, Canada and Nordic region since January 2015, and closed 10 U.K. branches in the most recent six-month period.

Plumbing, heating and building products distributor Wolseley — No. 1 on Industrial Distribution's 2015 Big 50 List — on Tuesday reported its six-month financial results for the period ended Jan. 31, highlighted by reductions in non-U.S. branches and headcount despite total sales and profit gains.

The company's most recent half-year sales of $9.66 billion were up 5.9 percent from the same period in 2015, up 4.6 percent at constant exchange rates and up 2.7 percent on a like-for-like basis. Ongoing trading profit of $582.5 million was up 5.1 percent from 2015.

"The Group delivered a resilient trading performance in the first half, despite mixed market conditions and sustained deflationary headwinds," said Wolseley CEO Ian Meakins, who in January announced he is retiring on Aug. 31, to be succeeded by CFO John Martin. "Growth was driven by good commercial and residential markets for Ferguson in the USA, partly offset by weak industrial markets and price deflation. In the UK, repairs, maintenance and improvement and social housing markets were challenging and we are stepping up cost control initiatives."

In the six-month period in the U.K., Wolseley closed 10 branches, and reduced headcount by 1 percent since January 2015. In the Nordic region, headcount was reduced by 2 percent since January 2015. In Canada, headcount was reduced by 4 percent since January 2015.

The company said residential and commercial markets accounted for 70 percent of U.S. sales and held up well, but industrial markets in the U.S. and Canada remained challenging due to lower oil prices and the impact of the strong dollar. Price deflation in the U.S., U.K. and Central Europe negatively impacted total sales by 1.4 percent.

Here's how six-month sales fared by geographic segment, in constant exchange rates:

  • U.S., six-month sales of $6.23 billion increased by 6.5 percent from 2015 in constant exchange rates, and profit grew by 5.5 percent.
  • In the U.K., sales of $1.42 billion grew by 1.2 percent, while profit declined 20.9 percent.
  • Nordic sales of $1.26 billion grew 3.2 percent and profit grew 14.5 percent.
  • Canada sales of $467.6 million declined 0.5 percent and profit declined 16.7 percent.
  • Central Europe sales of $290.0 million declined 2.7 percent and profit declined 2.7 percent.

Wolseley said noted strong growth in e-commerce, which now comprises 14 percent of its group sales. The company said it has completed two acquisitions since Jan. 31, with a combined revenue of $18.5 million.

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