Wolseley Releases 1Q Results

ZURICH, Switzerland -- Wolseley recently released its Q1 interim management statement. Here is a summary of the results:

First quarter trading performance

During the quarter the Group generated revenue of £3,641 million, 5% ahead of last year. The gross margin of 27.1% was 0.1% ahead of last year, despite increasing pricing pressure. Wolseley has grown market share in the key regions and continues to implement initiatives to protect margins. Operating costs were £24 million higher than last year, including the previously announced increases in employee share scheme expenses and pension contributions of £10 million. Headcount remains in line with the year-end position and the Group remains on target to extract all residual costs within 12 months of the completion of disposals. Trading profit of £185 million was £26 million higher than last year including £5 million of one-off credits, primarily from property disposals, and £3 million from businesses sold or held for sale. The Group also benefitted from an extra trading day in the USA, UK, Nordics and Canada which contributed £7 million of trading profit. Movements in foreign exchange rates added £29 million (0.8%) to revenue and £2 million to trading profit in the quarter.

Disposals

On 31 October 2011 the Group disposed of Encon, the UK insulation business, which generated revenue of £183 million and trading profit of £5 million in the year ended 31 July 2011. Cash consideration of £20 million was paid on completion with a further £22 million satisfied through the issue of loan notes repayable in 2016. On 4 November 2011 the disposal of Build Center was completed as previously announced, and on 17 November 2011 the Group disposed of its remaining minority stake in Stock Building Supply for cash consideration of £15 million.

"Wolseley has continued to grow well, with strong growth in the USA offset by lower growth in some of our European businesses,” said chief executive Ian Meakins. “Given continuing macroeconomic uncertainty, trading conditions may get tougher in the coming months. We will remain vigilant on costs and continue to drive performance improvements, strong cash conversion and better customer service. Our balance sheet is strong and the Group is well positioned to continue to invest selectively where we can generate good returns."