Wolseley Plc's (WOSYY.PK,WOS.L,WOSCF.PK) shares fell some 3 percent Tuesday morning as the British plumbing and heating products distributor reported lower revenues for the third quarter amid weakness in Europe.
Chief Executive Ian Meakins said, "Wolseley has continued to make decent progress in the third quarter, with good growth in the USA and Canada partly offset by Europe."
The company said it will remain vigilant on the cost base due to the uncertain European economic outlook.
In the third quarter, total revenues fell 2.3 percent to 3.20 billion pounds hurt by lower revenues from businesses sold or held for sale. During the period, the company completed its previously announced sale of Brossette and sold Bathstore.
Meanwhile, revenues from ongoing operations rose 4.7 percent to 3.07 billion pounds. Like-for-like sales, excluding the effect of currency exchange, acquisitions and disposals, increased 3.8 percent in the quarter.
The impact of inflation on total revenue was approximately 2 percent. "We held our gross margin overall and controlled costs to generate 10 per cent trading profit growth in the ongoing business," Meakins added.
In the quarter, revenues from USA increased 13.3 percent as most of the key businesses continued to take market share. Canada and UK also performed well.
These increases were partly offset by lower revenues from Nordic, France and Central Europe regions due mainly to weak construction markets.
Trading profit from ongoing operations before exceptional and other items climbed 10.3 percent to 139 million pounds.
Operating costs were 3.6 percent higher than last year including increases in employee share scheme expenses and one-off restructuring charges, the company said.
Citing the tough markets in Europe, Wolseley said it may incur further restructuring charges in the fourth quarter, while these will not be material to its full-year results.
Looking ahead, Meakins said the company will continue to pursue operating efficiencies and remain focused on customer service, gaining market share and protecting gross margins.
The company is scheduled to release its full year results on Tuesday October 2.
In London, Wolseley shares are currently trading at 2,206 pence, down 94 pence or 4.09 percent.
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by RTT Staff Writer
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