21 March 2005
Wolseley plc Unaudited Interim Results for the half year ended 31 January 2005
Wolseley plc announces a ninth set of record first half results
Summary of Results
|
|
|
Change |
|
Half Year to
31 January
2005
£m |
Half Year to
31 January
2004
£m |
Reported
% |
in
constant
currency
% |
| Group sales |
5,331.9 |
4,828.3 |
+10.4 |
+16.5 |
| Group trading profit(1) |
322.3 |
257.1 |
+25.4 |
+32.6 |
| Group operating profit |
301.5 |
237.9 |
+26.7 |
+34.1 |
| Group profit before tax, before goodwill amortisation |
308.0 |
245.5 |
+25.5 |
+32.9 |
Group profit before tax
|
287.2 |
226.3 |
+26.9 |
+34.6 |
| Earnings per share, before goodwill amortisation |
38.40p |
30.44p |
+26.1 |
+33.7 |
| Basic earnings per share |
34.86p |
27.15p |
+28.4 |
+36.3 |
As reported, in sterling (after currency translation effect):-
- Group trading margin(1) increased from 5.3% to 6.0%
- Strong operating cash flow of £300.7 million (2004: £99.4 million)
- Interim dividend increased by 12.8% to 8.80 pence per share (2004: 7.80 pence)
- Strong financial position with gearing(2) of 55.1% (2004: 53.9%) and interest cover of 21.1 times (2004: 20.5 times)
- Return on gross capital employed increased from 16.7% to 19.4%.
(1) Trading profit, a term used throughout this announcement, is defined as operating profit before goodwill amortisation. Trading margin is the ratio of trading profit to sales expressed as a percentage.
(2) Gearing is the ratio of net borrowings, excluding construction loan borrowings, to shareholders’ funds.
Operating highlights
- Constant currency organic sales growth of 11.2% across the Group with double-digit increases in Ferguson (17.0%), Stock Building Supply (15.1%) and Wolseley Canada (11.2%). Wolseley UK organic sales growth up 7.7%, well ahead of the market.
- Improvement in trading margin achieved across all three divisions:
- Ferguson achieved its highest ever trading margin of 7.4%, well ahead of the original target of 6% for this year and up from 6.1% in the first half of 2004;
- Wolseley UK increased from 6.7% to 7.0%;
- Stock Building Supply up from 4.7% to 5.5%.
- Significant improvement in performance from:
- Ferguson due to strong organic growth and continued supply chain efficiencies;
- Stock Building Supply resulting from enhanced market focus, restructuring and higher lumber prices;
- PBM outperforming profit expectations.
- Total consideration of £217.8 million for 13 acquisitions completed in the first six months should generate around £354 million per annum of incremental sales in a full year.
- Investment in infrastructure continues in order to enhance the Group’s operational performance, achieve synergies and leverage its international strengths. Increase in capital expenditure reflects expansion of the distribution centre network in the USA, continued investment in new head offices in France and the UK and further progress in developing the common IT platform.
- New North American management structure announced to create synergies and additional growth opportunities across the Group’s three North American businesses.
Outlook
- Overall, market conditions in North America and the UK are expected to remain favourable for the remainder of this financial year and should enable the Group to achieve further good progress, although there is likely to be a lower rate of growth in the second half of 2005 due to the stronger comparatives and the likely absence of further significant commodity price inflation.
- The strong North American economies should present further opportunities for organic growth. The housing markets are likely to remain strong; the positive repairs, maintenance and improvement (“RMI”) market is expected to continue and the industrial and commercial markets should show further progress.
- In the UK, the RMI market will continue to be the main driver of growth with benefits arising from a strong economy and further government spending.
- In France, some benefit should arise from the stronger new housing market in the second half but growth in the RMI market is likely to remain modest.
- In the rest of Continental Europe, the Group expects a continuation of the general pattern seen in the first half of broadly flat markets but improved sales and profits.
- The Group is well placed to take advantage of the favourable market conditions in its key trading markets and will continue to pursue its objective of achieving double-digit sales and profit growth through implementing business improvement initiatives.
Summary of results
|
2005 |
2004 |
Change |
| Sales |
£5,331.9m |
£4,828.3m |
10.4% |
| Operating profit |
|
|
|
| - before goodwill amortisation |
£322.3m |
£257.1m |
25.4% |
| - goodwill amortisation |
£(20.8)m |
£(19.2)m |
|
| Operating profit |
£301.5m |
£237.9m |
26.7% |
| - Interest |
£(14.3)m |
£(11.6)m |
|
| Profit before tax |
|
|
|
| - before goodwill amortisations |
£308.0m |
£245.5m |
25.5% |
| - goodwill amortisation |
£(20.8)m |
£(19.2)m |
|
| Profit before tax |
£287.2m |
£226.3m |
26.9% |
| Earnings per share |
|
|
|
| - before goodwill amortisation |
38.40p |
30.44p |
26.1% |
| - goodwill amortisation |
(3.54)p |
(3.29)p |
|
| Basic earnings per share |
34.86p |
27.15p |
28.4% |
| Dividend per share |
8.80p |
7.80p |
12.8% |
| Net borrowings |
£1,115.6m |
£947.2m |
|
| Gearing |
55.1% |
53.9% |
|
| Interest cover (times) |
21.1 |
20.5 |
|
| |
£300.7m |
£99.4m |
|
Charles Banks, Wolseley plc Group Chief Executive said:
“We are delighted to report record half-year results for the ninth consecutive time. Overall, sales increased by more than 10% and trading profit was up more than 25%, with strong improvements being achieved by each of the three divisions. We are continuing to invest significantly in further improving our supply chain, sourcing and procurement to deliver growth and enhanced returns. The business is performing well and the economic outlook for the rest of the year gives us confidence going forward.”
Enquiries:
Wolseley plc
Tel: 0118 929 8700
Guy Stainer – Head of Investor Relations
Brunswick
Tel: 020 7404 5959
Andrew Fenwick
Nina Coad
An interview with Charles Banks, Group Chief Executive and Steve Webster, Group Finance Director, in video/audio and text will be available from 0700 (GMT) on www.wolseley.com and www.cantos.com
There will be an analyst and investor meeting at 0930 (GMT) at UBS Presentation Centre, 1 Finsbury Avenue, London EC2. A live audio cast and slide presentation of this event will be available at 0930 (GMT) on www.wolseley.com
There will be a conference call at 1500 (GMT):
UK/European dial-in number: +44 (0) 20 7162 0181
US toll free dial-in number: +1 334 323 6203
The call will be recorded and available for playback until 4 April 2005 on the following numbers:
UK/European replay dial-in number: +44 (0) 20 7031 4064 Pin: 647885
UK freephone number: 0800 358 1860
North American replay dial-in number: +1 954 334 0342 Pin: 647885
The full detailed press release is available in .pdf format.
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