3rd Quarter Results

RNS Number : 1905G

Wolseley PLC

04 June 2013

 



WOLSELEY PLC

4 June 2013

Results for the third quarter to 30 April 2013

£ million		Q3 2013	Q3 2012	Growth		Like-for-like Growth(1)
Revenue	Ongoing(2)	3,229	3,047	+6.0%		+2.4%
	Sold	-	150
		3,229	3,197
Trading Profit(3)	Ongoing	150	139	+7.9%
	Sold	-	2
		150	141
Net debt		694	277

¹The increase or decrease in revenue excluding the effect of currency exchange, acquisitions and disposals, sales days and
  branch openings and closures.

² Throughout this report 'ongoing businesses' exclude businesses sold or held for sale.

³ Before exceptional items and the amortisation and impairment of acquired intangibles.

Third quarter highlights (ongoing businesses)

§ Revenue increased by 6.0% and like-for-like growth was 2.4%.

§ Gross margin of 27.9% in line with last year.

§ Trading profit of £150 million, 7.9% ahead of last year.

§ Net debt of £694 million (before interim dividend payment), £177 million lower than at    31 January 2013.

Commenting on the results, Ian Meakins, Chief Executive 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 held our gross margin overall and controlled costs to generate 7.9%  trading profit growth in the ongoing business.   We will continue to pursue operating efficiencies and remain focused on customer service, gaining market share and protecting our gross margins. 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."

Third quarter trading performance (ongoing businesses)

During the quarter the Group generated revenue of £3,229 million, 6.0% ahead of last year and 2.4% ahead on a like-for-like basis. The impact of inflation on Group revenue was approximately 1%. The gross margin of 27.9% was in line with last year, despite a continuing tough pricing environment. We gained market share in key regions and continued to implement initiatives to hold or improve gross margins.  Operating costs and headcount continue to be tightly controlled and reduced where markets are weakening. Trading profit of £150 million was 7.9% higher than last year and the Q3 trading margin improved to 4.7%  despite there being one less trading day in the period, costing approximately £6 million and despite a drag from the recent acquisition in the UK.  Foreign exchange movements were favourable, increasing ongoing revenue by £92 million and trading profit by £5 million. 

£ million	Q3 2013 Revenue	Q3 2012 Revenue	Change	Like-for-like Change	Q3 2013 Trading Profit	Q3 2012 Trading Profit
USA	1,689	1,505	+12.2%	+8.3%	115	95
Canada	190	189	+0.5%	-	7	6
UK	467	420	+11.2%	+5.2%	24	26
Nordic	430	449	(4.2%)	(7.3%)	6	7
France4	236	258	(8.5%)	(9.2%)	4	5
Central Europe4	217	226	(4.0%)	(4.6%)	3	9
Central and other costs	-	-	-	-	(9)	(9)
Ongoing operations	3,229	3,047	+6.0%	+2.4%	150	139
Sold	-	150			-	2
Group	3,229	3,197			150	141

Quarterly like-for-like revenue growth trend by region

	Q3 Last year	Q4 Last year	Q1 This year	Q2 This year	Q3 This year
USA	+9.4%	+6.7%	+7.1%	+9.7%	+8.3%
Canada	+7.9%	+4.5%	+3.1%	+1.2%	-
UK	(0.4%)	+3.5%	(0.3%)	+0.3%	+5.2%
Nordic	(1.7%)	(2.9%)	(4.8%)	(8.0%)	(7.3%)
France4	(5.3%)	(5.0%)	(8.1%)	(12.9%)	(9.2%)
Central Europe4	(1.9%)	(1.8%)	(0.9%)	(1.7%)	(4.6%)
	+3.8%	+2.9%	+2.1%	+2.3%	+2.4%

⁴ Restated for the transfer of Wood Solutions business into Central Europe, which generated revenue
  of £56 million (2012: £62 million) and trading profit of £1 million (2012: £4 million) in the period.

USA

In the USA like-for-like revenue growth was 8.3% as the key businesses continued to take market share. Repair, Maintenance and Improvement (RMI) markets remained resilient and the recovery in new residential markets continued. The Blended Branches business generated strong like-for-like revenue growth with profit strongly ahead. The Heating, Ventilation and Air Conditioning (HVAC) and Waterworks businesses also made good progress improving their trading performance.  Industrial was held back by lower activity levels in the shale gas sector. The B2C business continued to perform strongly.  Acquisitions contributed 2.5% of additional revenue growth in the period. Gross margins were ahead of last year and overall US trading profit of £115 million was £20 million ahead.

Canada

Like-for-like revenue in Canada was flat as new residential construction volumes were weaker, although this was partially offset by continued infrastructure investment. Blended Branches grew modestly and improved gross margins and Industrial continued to benefit from strength in the extractive sectors.  Market conditions were slightly weaker elsewhere in the business. Gross margins were ahead of last year and operating costs were tightly controlled. Trading profit of £7 million was slightly ahead of last year.

UK

Like-for-like revenue growth in the UK was 5.2% driven by growth in Plumb and Parts Center which increased market share although gross margins were lower. Pipe and Climate Center continued to be held back by weaker industrial markets but improved gross margins and tight cost control contributed to a better operating result. The business made excellent progress on the integration of the recent Burdens acquisition and development of the B2C ecommerce business, both of which are proceeding in line with our plans.  These investments, along with one less trading day, had an impact on trading profit in the period, which was £2 million lower at £24 million.

Nordic

In the Nordic region like-for-like revenue decreased by 7.3% as construction markets and consumer sentiment remained very weak across the region.  Our businesses, which are strategically strong, performed broadly in line with the market overall. Gross margins were ahead and, in light of the tough conditions we continue to focus on tight control of the cost base, in particular restricting the normal seasonal increase in headcount.  Trading profit of £6 million in the quarter was £1 million below last year.

France

Like-for-like revenue in France declined by 9.2% as new residential construction remained weak.  We are making good progress executing the proposals outlined in the strategic review.  Gross margins were slightly below last year and we continue to tightly control the cost base. Trading profit of £4 million was £1 million below last year.

Central Europe

The results of Central Europe now include the Wood Solutions business. Like-for-like revenue declined by 4.6%.  Switzerland grew modestly, though revenues were lower elsewhere in the region. The gross margin in the period was also slightly lower.  Trading profit of £3 million in the quarter was £6 million below last year, the largest part of which related to Wood Solutions.

Nine months trading performance

£ million	YTD 2013 Revenue	YTD 2012 Revenue	Change	Like-for-like Change	YTD 2013 Trading Profit	YTD 2012 Trading Profit
USA	4,877	4,471	+9.1%	+8.0%	338	268
Canada	630	615	+2.4%	+1.6%	35	31
UK	1,319	1,269	+3.9%	+1.7%	68	70
Nordic	1,365	1,493	(8.6%)	(6.5%)	45	53
France5	656	756	(13.2%)	(10.1%)	(4)	8
Central Europe5	658	712	(7.6)%	(2.4%)	22	33
Central and other costs		-	-	-	(30)	(24)
Ongoing operations	9,505	9,316	-	2.3%	474	439
Sold	-	722			-	12
Group	9,505	10,038			474	451

⁵ Restated for the transfer of Wood Solutions business into Central Europe, which generated revenue
  of £142 million (2012: £170 million) and trading profit of £2 million (2012: £8 million) in the period.

Financial position

Net debt at 30 April 2013 was £694 million (31 January 2013: £871 million). There has been no other significant change in the financial position of the Group since 31 January 2013.

Outlook

The overall growth rate in May has been similar to the growth rate in the third quarter. 

The US and the UK have continued to grow well, whilst market conditions remain challenging in the rest of Europe.

For further information please contact

Wolseley plc

John Martin, Chief Financial Officer	Tel:       [phone]
Mark Fearon, Director of Corporate Communications and IR	Mobile: +44  (0) 7711 875070

Brunswick (Media Enquiries)

Mike Harrison, Sophie Brand

Tel:       [phone]

Investor conference call

A conference call with John Martin, CFO will commence at 09.00 UK time today. The call will be recorded and available on our website after the event www.wolseley.com.

Dial in number:		UK	[phone]
		Switzerland	[phone]

Ask for the Wolseley call quoting 6266063.   

Notes to statement

Wolseley plc is the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials in North America, the UK and Continental Europe. Group revenue for the year ended 31 July 2012 was £12.7 billion and trading profit was £658 million. Wolseley has around 40,000 employees, is listed on the London Stock Exchange (LSE: WOS) and is in the FTSE 100 index of listed companies.

The Group will issue its full year results on Tuesday 1 October 2013.

-ends-

Certain information included in this announcement is forward-looking and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements.  Forward-looking statements cover all matters which are not historical facts and include, without limitation, projections relating to results of operations and financial conditions and the Company's plans and objectives for future operations, including, without limitation, discussions of expected future revenues, financing plans, expected expenditures and divestments, risks associated with changes in economic conditions, the strength of the plumbing and heating and building materials market in North America and Europe, fluctuations in product prices and changes in exchange and interest rates. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "believes", "estimates", "anticipates", "expects", "forecasts", "intends", "plans", "projects", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology.  Forward-looking statements are not guarantees of future performance.  All forward-looking statements in this announcement are based upon information known to the Company on the date of this announcement.  Accordingly, no assurance can be given that any particular expectation will be met and readers are cautioned not to place undue reliance on forward-looking statements, which speak only at their respective dates. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.  Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Services Authority), the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws

 

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