Plumbers and builders merchant group Wolseley reaped the rewards of its cost-cutting and disposal programme, seeing group sales rise 3% with trading profits 38% ahead for the year ending July 31 2011.
Revenue of £13.5bn, was 3% ahead of last year and 5% ahead on a like-for-like basis. The gross margin rose 20 points higher despite challenging trading conditions.
Revenue in the UK was 3% lower in the year, although the ongoing businesses were 2% ahead due principally to commodity price inflation. Public sector activity, which represents around 25% of UK revenue, weakened in the second half. The more resilient RMI sector, which represents about 65% of revenue held up reasonably well.
Trading profit of £109m was £18m ahead of last year, of which £7m arose within the ongoing businesses with higher revenue and gross margins partly offset by a £5m one-off bad debt charge.
Group finance director John Martin said in the company's analyst webcast: "The on going businesses in the UK held up with sales up 2%. Gross margins were ahead with costs broadly flat."
He described the businesses' growth as "very encouraging in the current environment" and that the group had even made some market share gains, helping to make up for the loss of a major plumbing and heating contract loss announced at the half-year.
"A major step forward has been the launch of the ecommerce platform which lets customers check store availability for 40,000 products and alongside that we rolled out a Parts Center into every branch of Plumb Center and opened up a number of sustainability training centres.
"Pipe & Climate Centers both grew their businesses and their market share. In fact, only one business went backwards and that was Bathstore where revenues were down 15% but it still made a profit."
The group also took a £29m write-down to reflect Bathstore’s reduced value on its books.
During the year, Wolseley sold off the Electric Center brand to Edmondson Electrical and the Build Center business to Jewson in a deal which also includes the sales of French plumbers merchant Brossette to Jewson parent Saint Gobain. The deal is currently being looked at by the competition authorities.
Ian Meakins, Chief Executive said: "Strategically the group is in good shape with the business increasingly centered on the less volatile RMI market. That gross margins held up well is testament to the strength of our business model. We believe we have a strong platform for the future. 3,300 branches
"We have a strong portfolio now, the return on sales is improving, and the return on capital employed is very close to the peak achieved in 2008.
"We are still confident that we can get back to our peak levels of sales but we know we are not immune to another downturn. In the longer term, we see good prospects for the group."