National: Wolseley warns of euro threat to earnings

PLUMB Center owner Wolseley offset a 10% rise in quarterly profits today with a warning that the stronger pound was likely to impact results this summer.

Good growth in the United States and Canada, where the company generates around half of its revenues, meant Wolseley recorded trading profits of �139 million for the three months to April 30.

But the progress was countered by tough trading conditions in Europe, particularly France, and from the company’s warning that profits growth in the current quarter will be impacted if the euro continues to weaken against the pound.

Shares fell more than 4% even though Panmure Gordon stockbrokers said the third quarter trading figures were slightly ahead of its forecast.

Analyst Andy Brown said: “Its North American operations are performing well, with market share gains supplementing slightly better markets. European markets are more difficult.”

Trading profits in the UK were �3 million higher in the quarter at �26 million, reflecting lower bad debt charges and revenues growth of 1.9% on an underlying basis due to better performances at Plumb Center and Parts Center.

In France, like-for-like revenues declined by 6.1% as new construction markets weakened and the company warned that the end of recent Government stimulus activity would have an effect on activity levels going forward.

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Trading profits in France were �6 million below last year at �9 million and included �1 million of restructuring charges.

In the United States, profits were up �19 million to �95 million and like-for-like revenues grew 9.4% after most of the company’s key businesses lifted market share and the recovery in residential work continued.

Chief executive Ian Meakins said: “Wolseley has continued to make decent progress in the third quarter, with good growth in the USA and Canada partly offset by Europe.

“Given the uncertain economic outlook in Europe we will remain vigilant on the cost base while continuing to drive growth initiatives in the more robust markets.”