LONDON (dpa-AFX) - Plumbing and heating products distributor Wolseley Plc (WOS.L) Tuesday reported a 5 percent growth in revenue for the first quarter, with strong growth in the U.S. Looking ahead, the company said trading conditions may get tougher in the coming months due to continuing macroeconomic uncertainty.
In an interim management statement for the three months ended October 31, the company said revenue increased to 3.641 billion pounds from 3.471 billion pounds in the prior-year period. Like-for-like revenue growth was also 5 percent.
Revenue from the U.S. grew 11 percent to 1.53 billion pounds and like-for-like revenue growth was 10 percent with particular contribution from the the Blended Branches business. Growth was weaker in the Heating, Ventilation and Air Conditioning business due to removal of government tax incentives that expired in December 2010. All key businesses continued to take market share in the segment.
Revenue in the quarter increased 8 percent in Nordic to 623 million pounds, while it declined 7 percent in the UK to 591 million pounds.
Trading profit, or operating profit before exceptional items and the amortisation and impairment of acquired intangibles, increased 16 percent to 185 million pounds. This included 5 million pounds of one-off credits, primarily from property disposals, and 3 million pounds from businesses sold or held for sale.
Gross margin improved 0.1 percent to 27.1 percent, amid increasing pricing pressure. Operating costs increased 24 million pounds from last year, including increases in employee share scheme expenses and pension contributions of 10 million pounds.
Further, the company said its Ferguson business is writing to certain customers in the U.S. and Canada regarding the unintentional supply of gaskets that were mislabelled by a former supplier, Lortech Rubber Inc. of Canada as being non-asbestos.
Four customers found asbestos in gaskets above the 1 percent level where it can be classified as non-asbestos. Lortech has not cooperated with Ferguson and it does not know the number of asbestos-containing gaskets that has been supplied.
Looking ahead, Ian Meakins, Chief Executive of the company, said, 'Wolseley has continued to grow well, with strong growth in the USA offset by lower growth in some of our European businesses. 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...the Group is well positioned to continue to invest selectively where we can generate good returns.'
WOS.L closed on Monday at 1,903 pence, down 21 pence or 1.09 percent, on 1.94 million shares.
Copyright RTT News/dpa-AFX
