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Wolseley H1 Profit Climbs On US Growth, Hikes Dividend

3/27/2012 3:38 AM ET

Plumbing and heating products distributor Wolseley Plc (WOS.L, WOSYY.PK,WOSCF.PK) on Tuesday reported what it called a "decent" performance for the first-half, as continued growth in the U.S., its major market, offset weakness in Europe and lower results from UK.

Reporting a 28 percent increase in pre-tax profit for the half, the company proposed a 33 percent hike in interim dividend to 20 pence per share.

Looking ahead, Chief Executive Ian Meakins said, "Like-for-like growth trends for the Group since the end of the period have been slightly lower than the first half overall with the US a little better and Europe a little weaker. We will continue to pursue operating efficiencies and remain focused on improving customer service, gaining market share and protecting our gross margins."

For the first six months of fiscal 2012, pretax profit climbed to 250 million pounds from last year's 195 million pounds. Adjusted pre-tax profit, which excluded certain exceptional items and amortization of acquired intangibles, was 295 million pounds, higher than 244 million pounds a year ago.

First-half revenues increased 3 percent to 6.84 billion pounds from 6.63 billion pounds in 2011. Revenues from ongoing operations grew 7 percent to 6.33 billion pounds. On a like-for-like basis, revenues grew 5 percent.

In the second quarter, total like-for-like sales increased 5 percent, as a 2 percent decline in UK was more than offset by good growth in all other regions.

The company said it delivered "a good overall result against a backdrop of continued weak demand in Europe and improved market conditions in the USA and Canada."

Revenues from the US increased 11 percent on a reported basis and 9 percent on a like-for-like basis, including price inflation of approximately 4 percent. The company said the RMI segment remained resilient and there has been a modest recovery in levels of new construction. The major business units of Blended Branches, Waterworks and Industrial continued to gain market share.

Revenues from UK edged down 1 percent on a reported basis and 3 percent on a like-for-like basis mainly due to the impact of last year's contract loss. Adjusting for this loss, like-for-like revenue was 2 percent ahead of last year as the business made considerable progress in replacing the lost volumes.

The company noted that underlying gross margin in the ongoing business remained unchanged, while its ongoing focus on operational efficiency has delivered further improvements in the underlying trading margin of the ongoing business to 5 percent from 4.6 percent a year ago.

Wolseley shares are currently trading at 2,466 pence, down 53 pence or 2.10 percent in London.

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by RTT Staff Writer

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