US surge cuts pressure on Wolseley UK

Plumbing and heating merchant Wolseley weathered a 20 per cent slide in UK profits after benefiting from strong trading in the United States.

The loss of a national boiler supply contract worth £70 million a year and continued tough trading at its Bathstore consumer arm contributed to a fall in UK profits to £24m for the quarter to 31 October.

Like-for-like sales were down by 3 per cent but Wolseley said that, excluding the recent contract loss, the figure would have been 1 per cent higher as its Plumb and Parts Center businesses battled to replace the lost work. The profits slide also reflected recent disposals such as the sale of Build Center to Jewson owner Saint-Gobain.

Across the group, the world’s largest specialist distributor of plumbing and heating products, profits were 5 per cent higher at £988m.

Wolseley said a 10 per cent rise in like-for-like revenues in the US came as its operations took market share from weaker rivals.

Kevin Lapwood, an analyst at stockbroker Seymour Pierce, said the company was surviving in tough conditions. “The better-than-expected results do not mark the end of the construction slump in North America, but they do give clear evidence that large well-funded operators like Wolseley are better placed to weather the current economic conditions than many smaller competitors,” Lapwood said.

He upgraded his forecast for full-year revenues to nearly £13 billion and increased his target for pre-tax profits by £9m to £587m.