26 September 2005
Wolseley plc Preliminary Results for the Year Ended 31 July 2005
Wolseley plc announces ninth consecutive year of record results
Summary of Results
Financial highlights
|
|
|
Change |
|
Year to
31 July
2005
£m |
Year to
31 July
2004
£m |
Reported
% |
in
constant
currency
% |
| Group sales |
11,257.7 |
10,128.1 |
+11.2 |
+14.2 |
| Group trading profit(1) |
720.8 |
619.2 |
+16.4 |
+19.7 |
| Group operating profit |
677.4 |
580.2 |
+16.8 |
+20.1 |
| Group profit before tax, before goodwill amortisation |
691.2 |
598.1 |
+15.6 |
+18.8 |
Group profit before tax
|
647.8 |
559.1 |
+15.9 |
+19.2 |
| Earnings per share, before goodwill amortisation |
85.93p |
74.84p |
+14.8 |
+18.1 |
| Basic earnings per share |
78.53p |
68.15p |
+15.2 |
+18.6 |
As reported, in sterling (after currency translation effect):-
- Group trading margin(1) increased from 6.1% to 6.4%
- Strong operating cash flow of £763.6 million (2004: £325.2 million)
- Total dividend for the year increased by 10.9% to 26.4 pence per share (2004: 23.8 pence)
- Strong financial position with gearing(2) of 49.6% (2004: 49.5%) and interest cover of 23 times (2004: 27 times)
- Return on gross capital employed increased from 18.4% to 19.1%
(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. Organic change is the total increase or decrease in the year adjusted for the impact of exchange, new acquisitions in 2005 and the incremental impact of acquisitions in 2004.
(2) Gearing ratio is the ratio of net borrowings, excluding construction loan borrowings, to shareholders’ funds.
Operating highlights
- Constant currency organic sales growth of 8.7% across the Group with double-digit increases in Ferguson (15.2%), Stock (10.7%) and Wolseley Canada (10.5%).
- Constant currency trading profit growth of 19.7% across the Group:
- Ferguson’s trading profit grew 24.8% to exceed $500 million for the first time;
- Stock’s profit increased by 32.4% to more than $250 million for the first time;
- Strong profit growth in PBM (13.8%), Wolseley Canada (11.8%), Wolseley UK (11.2%) and Wasco (95.7%);
- Profits down 2.3% in Brossette due to reorganisation to improve future performance.
- Trading margin increased in all three divisions with particularly strong improvements in the PBM, Stock and Ferguson businesses.
- Total consideration of £430.6 million on 26 acquisitions should generate over £770 million per annum of incremental sales in a full year.
- European Distribution division made further progress towards managing the businesses in a more integrated way. Initiatives include: sharing best practice across operating companies; supplier rationalisation; product standardisation; low cost country sourcing and logistics collaboration.
- New North American structure established from 1 August 2005 to leverage assets and drive future growth.
- 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 (“DC”) network in the USA, continued investment in new head offices in France and the UK and further progress in developing the common IT platform. Branch network expanded by a net 283 locations to 3,920, including the 60th Ferguson XpressNet opening in the USA.
Outlook
- Market conditions in the USA are expected to remain favourable with repairs, maintenance and improvement (“RMI”) and the commercial and industrial sectors continuing to grow. Although the number of housing starts may reduce as a result of higher interest rates, the US housing market is expected to remain fundamentally strong. In Canada, the overall environment is expected to remain positive.
- In the UK, the RMI and housing markets are expected to show modest growth and positive trends in government spending are anticipated. The UK business should show
gains in market share and growth for the year.
- In France, growth in the RMI market is likely to remain modest. Both PBM and Brossette should see some benefit from their initiatives to improve performance and from the strong but slowing new housing market. Whilst the markets in the rest of Continental Europe are likely to remain broadly flat, Wolseley’s operations are expected to continue to make progress.
- Increasing benefits will be realised from the business improvement initiatives in place relating to supply chain, sourcing and procurement. The Group will continue to pursue its objective of achieving, on average, double-digit sales and profit improvements through a combination of organic growth and acquisitions.
- The Board expects another year of good progress.
Summary of results
|
2005 |
2004 |
Change |
| Sales |
£11,257.7 |
£10,128.1m |
+11.2% |
| Operating profit |
|
|
|
| - before goodwill amortisation |
£720.8m |
£619.2m |
+16.4% |
| - goodwill amortisation |
£(43.4)m |
£(39.0)m |
|
| Operating profit |
£677.4m |
£580.2m |
+16.8% |
| - Interest |
£(29.6)m |
£(21.1)m |
|
| Profit before tax |
|
|
|
| - before goodwill amortisations |
£691.2m |
£598.1m |
+15.6% |
| - goodwill amortisation |
£(43.4)m |
£(39.0m) |
|
| Profit before tax |
£647.8m |
£559.1m |
+15.9% |
| Earnings per share |
|
|
|
| - before goodwill amortisation |
85.93p |
74.84p |
+14.8% |
| - goodwill amortisation |
(7.40)p |
(6.69)p |
|
| Basic earnings per share |
78.53p |
68.15p |
+15.2% |
| Dividend per share |
26.4p |
23.8p |
+10.9% |
| Net borrowings |
£1,143.5m |
£941.4m |
|
| Gearing |
49.6% |
49.5% |
|
| Interest cover (times) |
23x |
27x |
|
Charles Banks, Wolseley plc Group Chief Executive said:
“The success of Wolseley’s strategy is demonstrated, once again, as we report our ninth consecutive year of record results. We have achieved an 11% increase in sales and 16% improvement in trading profit at the same time as securing important acquisitions and making significant investments in people, our branch and distribution centre network and technology, all of which will support our future growth.”
ENQUIRIES:
Investors/Analysts:
Guy Stainer 0118 929 8744
Head of Investor Relations 07739 778 187
Press:
Penny Studholme 0118 929 8886
Director of Corporate Communications
Brunswick 020 7404 5959
Andrew Fenwick
Deborah Fairbrass
An interview with Charles Banks, Group Chief Executive and Steve Webster, Group Finance Director, in video/audio and text will be available from 0700 UK time on www.wolseley.com and www.cantos.com
There will be an analyst and investor meeting at 0915 UK time at UBS Presentation Centre, 1 Finsbury Avenue, London EC2. A live audio cast and slide presentation of this event will be available at 0915 UK time on www.wolseley.com
There will be a conference call at 1500 UK time:
UK dial-in number: 020 7162 0083
US dial-in number: +1 334 323 6201
International Call in Number +44 20 7162 0083
The call will be recorded and available for playback until 10 October 2005 on the following numbers:
UK/European replay dial-in number: +44 (0) 20 7031 4064 Access code: 673303
UK freephone number: 0800 358 1860 (UK only)
North American replay dial-in number: +1 954 334 0342 Access code: 673303
Free phone number: +1 888 365 0240
The full detailed press release is available in .pdf format.
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