Belfast Telegraph

Wolseley shares in UK recovery

The owner of Plumb Center and Pipe Center today cheered shareholders with a £300 million windfall and surging annual profits.

Building materials giant Wolseley said it will pay another special dividend, on top of a bigger standard payout, following better trading in Britain and another year of strong gains in the United States.

But the group said it will continue to slash costs after axing more than 900 jobs during the year, as it struggles in France, central Europe and the Nordic region.

Like-for-like sales increased by 2.9% during the year to the end of July, with trading profits surging 10.7% to £725 million.

Wolseley said it is seeing "early signs of recovery" in the UK, where it also has brands including Drain Center and Parts Center.

It grew underlying revenues by 2.5% in the UK during the year, helped by improving housebuilding and home repairs as the housing market recovers, while trading profits edged up £2 million to £95 million.

Its core pipe, plumb, climate and parts businesses grew UK market share, but were held back by weaker industrial markets.

The group increased its UK workforce by a net 52 during the year to 5,952, after buying Burdens drainage supplies depots. But new joiners from the acquisition were largely balanced out by about 502 UK departures, including redundancies from a shake-up of its drains business.

Profit margins in the UK were weakened to 5.4% from 5.6% by the Burdens deal.

Wolseley's sales growth of 8.2% in the US contrasted with a 9.1% plunge in underlying sales in France and a 5.7% fall in Nordic countries.

The group, which is headquartered in Switzerland and registered in Jersey, has around 39,300 staff and earns 81% of its profits from the US and the UK.

Chief executive Ian Meakins said: "Our markets in the US continue to grow steadily and the UK market growth is encouraging.

"However, economic conditions in continental Europe are very challenging and we expect them to remain so for the foreseeable future.

"We will continue to take all appropriate actions to reduce our cost base and protect our profitability."

Wolseley's £300 million special divi - worth 110p per share - is in addition to a total divi up 10% to 66p per share. The group announced another £350 million special dividend with last year's annual results.

It is the latest windfall from a big blue-chip company, with British Gas owner Centrica returning £500 million to shareholders and Vodafone's £54 billion cash and shares payout from the sale of its US arm.

On a pre-tax level, including exceptional items such as cost cuts and goodwill impairments, profits swelled to £473 million from £198 million a year earlier. Ongoing group revenues rose 4.1% to £12.9 billion.

Analysts at Panmure Gordon said Wolseley appears to be " delivering on all fronts".

They added: "Operationally the business is performing at the top end of expectations, cash generation remains strong and further special dividends are being delivered to ensure shareholder value is maximised."

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