Wolseley reaps rewards as US market heats up

25-09-2006

Wolseley, the world's largest distributor of plumbing and heating products, announced a rise in pre-tax profits today, boosted by increasing demand in the US market.

In a statement, the Reading-based company said that its pre-tax profit before amortisation for the year to July 31st was £817 million, compared to £671 million a year ago.

Revenue for the period also rose by 23 percent to £14.2 billion.

Wolseley reported particularly strong growth within the North American market, where revenues were up 36.1 per cent and trading profit up 41.5 per cent.

Despite an uncertain economic outlook in the US, exacerbated by a softening in the new-build residential market there, Wolseley said it expected to see further growth based upon increasing demand in the repairs, maintenance and improvement market.

Commenting on the results, Wolseley group chief executive Chip Hornsby said that the company was confident that it would enjoy "many more years of substantial growth" based upon the "fragmented nature" of the construction materials distribution market in both Europe and the US.

"Although the slowing US housing market may bring us challenges next year, we will continue to pursue our double-digit growth targets through a combination of organic and acquisitive growth, utilising our competitive advantages of our scale, people, supply chain and reaping the rewards of our commitment to delivering customer solutions," he added.

But despite Wolseley's strong performance, shares in the company fell 5.3 per cent to 1,102 pence this morning following news that the company plans to sell new shares to cut its debt and fund further acquisitions.

Wolseley intends to sell 59.5 million new shares to institutional investors to cut borrowings arising from its acquisitions, including the £1.35 billion takeover of the Nordic building materials distributor DT, which is expected to be completed today.

During the course of the year the company has invested some £914 million on 53 completed acquisitions, which it expects to significantly boost revenues.


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