UK-based Wolseley plc’s pre-tax profits declined by 17.6% in the year to July 31, with its heavy exposure to the weak US market a key reason for the drop.
It also said recent events relating to the US subprime housing market had created “uncertainty” which was reflected in less favourable sales trends for a number of the group’s businesses. “It is too early to assess whether these trends will continue,” it said.
Although group revenue for the year increased by 14.6% to £16.2bn, pre-tax profits dropped to £634m from £769m. Operating profits declined by 9.7% to £753m.
North American operations saw revenue decline to £8.7bn, with trading profit down by 19.2% to £487m. Price deflation in lumber and panels, the weak dollar and poor housing market all impacted results.
Meanwhile, Wolseley UK, which includes the Build Center chain, recorded a 17.9% growth in revenue to £3.17bn, with organic growth of 9.9% outperforming the market generally.
During the year 59 new locations were added in the UK and Ireland, including 12 branches as a result of acquisitions, taking the total number of sites for Wolseley UK to 1,917.
In Europe, Wolseley said that “operations achieved good revenue and profit improvements”, with an additional eight countries and 450 branches added to the European network.
“Europe continues to progress, achieving strong profit improvement and benefitting from acquisitions during the period, whilst in the US we have been fast and decisive in reducing our cost base in reaction to deteriorating market conditions,” said group chief executive Chip Hornsby.
The group said it would continue to pursue its strategy of value creation through organic growth and acquisitions “irrespective of market conditions”.
