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'Further restructuring' for Wolseley amid 'subdued' trading

Published 01/06/2016

Wolseley is committed to further restructuring
Wolseley is committed to further restructuring

Plumb Center owner Wolseley said it was ramping up restructuring efforts across the UK and Europe as it revealed a sharp slowdown in sales growth amid "subdued" trading.

Shares in the FTSE 100-listed firm fell 6% after Wolseley said like-for-like revenue growth dropped to 1% in recent weeks, down from 2.8% in its third quarter.

The building supplies group said it had "committed to further restructuring" as part of an overhaul announced in March that will see 14 branches closed and around 300 jobs axed.

Its bill for the restructure will increase to around £20 million this year, up from £15 million previously.

The additional revamp efforts are not impacting further on branches or jobs, although there are fears of more cuts to its 6,200-strong UK workforce as it carries out a root-and-branch review of its British business.

It said it aims to complete the UK review by August.

Wolseley stuck by its full-year profits forecast, but cautioned over current trading.

"Demand in several of the Group's markets remains subdued and we continue to experience the adverse impact of commodity deflation, particularly in the US," it said.

The gloomier outlook comments came as Wolseley posted a 0.4% fall in like-for-like revenues for its UK business for the third quarter to April 30 as it was hit by weak repairs, maintenance and improvement markets.

It added the UK heating market "continued to be challenging and we continue to take actions to protect profitability".

But UK trading profits held firm at £26 million.

Ferguson - its US arm, which represents the bulk of Wolseley's earnings - grew like-for-like revenues by 5% in the quarter, down from growth of 8.3% a year earlier as it was impacted by lower demand in industrial markets.

US trading profits rose to £204 million, up 17.4% with currency effects stripped out.

Analysts at Liberum said Wolseley delivered a "decent" performance in the third quarter, but said the slower recent trading was a concern.

They added: "The Q3 update from Wolseley confirmed again that Ferguson is the jewel in the group's crown and that the rest of the businesses are running hard to stand still."

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