UK: Increased third quarter profits and sales for Wolseley despite tough conditions in Europe
- Credit: PA
Strong growth in the UK and United States helped building materials group Wolseley offset crumbling construction markets in Europe as third-quarter profits increased.
Wolseley, which achieves 14% of its sales from UK businesses such as Plumb Center, Pipe Center and Drain Center, said trading profits grew 7.9% to £150million in the three months to the end of April.
Underlying sales growth of 5.2% in the UK and 8.3% in America compared with steep falls in Europe and helped overall group like-for-like sales increase 2.4%.
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, although Pipe and Climate Center struggled amid weaker industrial markets.
The group said the integration of 22 recently-acquired Burdens drainage supplies depots was going well, although it said this, combined with more online sales developments, dragged trading profits in the UK £2m lower to £24m.
It recently announced plans to cut 200 jobs from the Burdens business, almost a third of its workforce.
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Growing market share in the US drove the group-wide increase in earnings, with trading profits in Wolseley’s biggest market rising £20m to £115m.
Wolseley’s underlying sales in central Europe fell 4.6%. Its Nordic revenues slid 7.3% on “very weak” construction markets and consumer sentiment. Underlying sales in France slumped 9.2% 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% of group trading profit, will continue to underpin the group’s overall sales growth going forward.”