Firmer American market lifts Wolseley profits

Tue Oct 2, 2012 7:01am EDT
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By Neil Maidment

LONDON (Reuters) - Improving industrial and residential activity in North America offset weak European markets for British plumbing and building supplies group Wolseley (WOS.L: Quote) over the past year, leading to a 10.4 percent rise in trading profit.

The group, which operates the Plumb Center and Ferguson chains in the UK and the U.S., also declared a special dividend of 350 million pounds ($565 million) on Tuesday, largely from proceeds from disposals of businesses and assets during the year.

The U.S. economy has grown at a lackluster pace this year and has struggled to create jobs, but the housing sector has been a relative bright spot for the first time since the 2007-09 recession, boosting business in Wolseley's core geography.

Wolseley said like for like sales in the U.S. had risen 8.4 percent in the year to July 31 as industrial and commercial activity picked up and residential markets began to recover.

Many economists expect construction of new homes will contribute to growth this year for the first time since 2005, boosting a U.S. economy that has hinted at some signs of improvement in recent weeks.

Repair and maintenance work had also improved in line with better consumer confidence in America, where Wolseley generates over half of group profit.

The group posted full-year trading profit of its ongoing businesses of 658 million pounds, just below a company-compiled consensus of 662 million, with group revenue up 5.4 percent to around 12.7 billion pounds.

"Wolseley continues to be highly cash generative and we have adequate resources to fund future investment in the business alongside growth in ordinary dividends," Chief Executive Ian Meakins said, adding the company was confident of progress this year.   Continued...