Wolseley sales under pressure amid falling profits

Plumb Center owner Wolseley warned of slowing sales growth
Plumb Center owner Wolseley warned of slowing sales growth
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Plumb Center owner Wolseley today warned over slowing revenue growth as it reported a 25 per cent slide in annual profits.

The building supplies group suffered from a weak UK home improvement market in the year to the end of July, while its heating business looked set “to remain competitive with very little growth”.

The US, which represents the bulk of Wolseley’s earnings, saw trading profits rise but suffered a tough period for industrial markets in the fourth quarter, which the group said was expected to continue.

Overall full-year group trading profits for ongoing businesses were 14 per cent higher at £857 million, while like-for-like revenues grew 7.1 per cent.

However, bottom line pre-tax profit fell by a quarter to £508m, largely as a result of a £234m writedown in the value of underperforming operations in Denmark, Finland and Sweden.

Wolseley said it expected like-for-like revenue growth in the first half of its new financial year to slow to 4 per cent. In June it had predicted growth of 6 per cent for the six months ahead.

Chief executive Ian Meakins highlighted the performance of US plumbing supplies business Ferguson, which saw strong growth.

But he added: “We continue to face some challenging markets in the rest of the group and remain focused on improving growth rates and protecting gross margins whilst keeping the cost base tight.”

Wolseley’s warning over slowing sales comes the day after Speedy Hire, the biggest tool and plant hire business in the UK, jolted the market with its second profit warning in two months.