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Wolseley:H1 results
Wolseley, the world’s largest specialist trade distributor of plumbing and heating products reported that operating profit rose 17.8% in the half year to January 2006.
The better results were driven by a surge in North American sales which grew by 40.1% in the half year. Trading profits in North America were up 39%.
Performance in Europe was poor. European revenues rose 7.6% but trading profit was marginally down, which the company said was due to a more difficult market environment in the UK and restructuring in France.
The company has been buying up businesses at a rapid rate – it spent £436m on 22 acquisitions in H1 and this looks to be the main driver of shorter and medium term growth. Wolseley says the new acquisitions will add £701m to turnover – or a little over 10% of current turnover. Further acquisitions are planned – the acquisition pipeline is described as being “strongâ€?.
The company expects that the North American market will remain favourable for the rest of the year while Europe should deliver results similar to H1.
The company is expected to outperform the sector in the short to medium term due to acquisitive lead growth and prospects look reasonably good despite the slowing housing market.
The share trades at 1450p, on a prospective PE (2006 earnings) of
13.8x, at the upper end of the sector range, with a yield of 2.3%.