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| Wolseley posts 14% decline in profit due to US slowdown  Wolseley plc, one of the largest distributors of building equipment in the world, with particular strength in plumbing and heating supplies, said profit before tax for the five months to 31 December 2006 was around 14% lower after reflecting certain one-off costs and a higher interest charge. The company has been affected by the continuing slowdown in the housing market and lower lumber prices in the USA. The effect of these factors has been partially offset by good organic revenue growth in the US plumbing and heating business (Ferguson), an improved performance in continental Europe and the contribution from acquisitions.Wolseley said revenue was up by around 15% after currency translation and including the effect of acquisitions. But trading margin for the five month period is lower than the equivalent period in the prior year primarily due to the lower margins in North America and Wolseley UK, commodity price gains last year which were not repeated and additional investments in the business to position the group for further growth. In North America, revenue increased by around 2% compared to the corresponding period in the prior year. Trading profit was down by around 15%, after charging one off costs relating to headcount reductions and store closures. In the USA, new housing starts have fallen more sharply than originally expected, but the repairs and remodelling market (“RMI”) and the commercial and industrial sectors continue to hold up. The US plumbing operations (Ferguson) produced good growth, albeit at a slower rate, with revenue in local currency for the five months to 31 December 2006 up by more than 15%. Organic growth was nearly 10%. Trading profit was up by around 10% on the equivalent period in the prior year. In Europe, revenue increased by around 40% in the five months to 31 December 2006, whilst trading profit was up by around 25%. Excluding DT Group, European revenues and trading profit were up by more than 15% and around 5%, respectively. Wolseley UK achieved revenue growth of around 20%, including double digit organic growth, reflecting generally improving trading conditions across most brands. Wolseley statement said although the uncertainties relating to the future direction of the US housing market are likely to remain throughout the second half, the Board currently expects the Group to make progress for the financial year as a whole. write your comments about the article :: © 2007 Construction News :: home page |