Wolseley earnings beat analysts’ estimates

Distribution company disposed of less-profitable units and US sales rose

Wolseley has scaled back unprofitable French businesses to shift focus to the recovering US construction market, which now accounts for more than half of revenue and earnings. Photo: Bloomberg.

Wolseley has scaled back unprofitable French businesses to shift focus to the recovering US construction market, which now accounts for more than half of revenue and earnings. Photo: Bloomberg.

Tue, Oct 1, 2013, 08:13

Wolseley, the world’s biggest distributor of plumbing and heating products, reported full-year earnings that beat analysts’ estimates after the company disposed of less-profitable units and US sales rose.

So-called trading profit in the 12 months through July climbed to £725 million (€867 million) from £665 million a year earlier, the Switzerland-based company said in a statement today.

Analysts had predicted earnings of £704 million, according to the average of 20 estimates compiled by the company.

Wolseley today proposed a special dividend payout of £300 million.

“The highlight of these results was another strong performance across our US business where we achieved good revenue growth,” chief executive officer Ian Meakins said.

“We continued to face substantial headwinds in Europe and took decisive action to protect profitability with significant headcount reductions in the year.” Wolseley’s share price has gained 10 per cent this year after the company streamlined operations.

Wolseley, which employs about 40,000 people, has scaled back unprofitable French businesses to shift focus to the recovering US construction market, which now accounts for more than half of revenue and earnings.

The wholesale distributor defines trading profit as earnings before exceptional items, amortization and impairment of acquired intangibles and non-recurring tax credits.

Full-year net income rose to £305 million from £57 million. Revenue declined 2 per cent to £13.2 billion.

Net debt as of July 31 was £411 million compared with £45 million in net cash a year earlier.

The year-earlier payout was 60 pence, while shareholders also received a special dividend of 124 pence.

“Our markets in the US continue to grow steadily and the UK market growth is encouraging,” the company said.

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

Bloomberg