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Wolseley profits boosted by growth in UK and US

Strong growth in the UK and United States helped building materials group Wolseley offset crumbling construction markets in Europe as third-quarter profits increased.

The Leamington Spa-based group, which achieves 14 per cent of its sales from UK businesses such as Plumb Center, Pipe Center and Drain Center, said trading profits grew 7.9 per cent to £150 million in the three months to the end of April.

Underlying sales growth of 5.2 per cent in the UK and 8.3 per cent in America compared with steep falls in Europe and helped overall group like-for-like sales increase 2.4 per cent.

The group added it saw similar trading in May, with the US and UK growing well while markets remained challenging in Europe.

Wolseley's UK growth was driven by its Plumb and Parts Center brands, but Pipe and Climate Center struggled amid weaker industrial markets.

The group said the integration of 22 recently-acquired Burdens drainage supplies depots is going well, although it said this combined with more online sales developments dragged trading profits in the UK £2 million lower to £24 million.

It recently announced plans to cut 200 jobs from the Burdens business, almost a third of its workforce.

Growing market share in the US drove the group-wide increase in earnings, with trading profits in Wolseley's biggest market rising £20 million to £115 million.

Wolseley's underlying sales in central Europe fell 4.6 per cent. Its Nordic revenues slid 7.3 per cent on "very weak" construction markets and consumer sentiment. Underlying sales in France slumped 9.2 per cent as housebuilding markets struggle.

The group said it continues to squeeze costs in Europe, but did not provide detail on job cuts.

Chief executive Ian Meakins said: "Wolseley continued to make decent progress in the third quarter, with good growth in the USA and the UK offsetting challenging conditions elsewhere in Europe.

"We will manage the cost base of each of our businesses commensurate with market conditions while executing our growth initiatives in the more robust markets."

Analysts at Shore Capital said: "The strength of the US and recovery in the UK businesses, which represent over 80 per cent of group trading profit, will continue to underpin the group's overall sales growth going forward."

Source : London Evening Standard

04 June 2013
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