Builders and plumbers merchant chain Wolseley plc has reported a 15% decline in first-half earnings, but ‘good progress’ in getting back on track.
However, the company remains cautious looking ahead, citing limiting factors such as credit conditions, foreclosures and unemployment, despite some stabilization in residential markets.
Group revenue was £6.331bn, down 15% from £7.458bn a year ago, with trading profit down 33% at £167m from last year’s £251m.
Exceptional items rose to £255m from last year’s £120m, and included £14m in redundancy costs and £42m in restructuring costs.
Pre-tax loss for the period was £261m. Operating loss was £207m, compared to £381m last year.
In the UK, which accounts for 19% of group revenue, sales fell 12% to £1.233bn from £1.4bn last year, although the overall like-for-like fall of 4% was a far better performance than the 13% decline recorded this time last year. Gross margins fell 1.3% and trading profit actually rose by a massive 67% to £33m, thanks to last year’s cost reductions.
The lightside businesses managed an overall trading margin of 6.5%, while the heavyside businesses managed to get back into profitability during the six months, thanks again to the reduced cost base.
Further cost base reductions in the first half, including a headcount reduction of 746, are designed to save a further £11m a year. The group sold off its Irish merchanting interests, as well as other under-performing businesses in Belgium, Czech Republic and Slovakia.
Ian Meakins, group chief executive, said: “The results for the first half reflect good progress on cost reductions which were delivered ahead of schedule. Market conditions remain challenging, though we are now seeing stabilisation in many of our markets. Against this backdrop, the Group will continue to focus on an improved service to customers, maintaining market share and gross margins, delivering a good cash performance and maintaining cost discipline.”
“The resource allocation work shows us clearly where to prioritise investment in our leading businesses where we have a strong competitive advantage and can generate the best returns.”