Wolseley has been busy addressing the effects of the global economic downturn, and progress so far has been impressive. Helped along by last year's fundraising, strong cashflow generation and a £353m cut in operating costs, net debt has been cut from £2.47bn in 2008 to £346m.
The heating and plumbing supplier generated £705m of cash from operating activities, and boosted trading margins from 3.1 per cent to 3.4 per cent, albeit still some way below the 5.7-6.6 per cent range prevailing before the credit crunch. The steadily improving trading climate saw positive revenue growth in most geographical sectors in the fourth quarter and though trading profits of £450m were wiped out by impairment and other restructuring costs of £555m, this was still a marked improvement on the £948m charge incurred a year earlier.
So shareholders are to be rewarded with the resumption of dividends, starting with an interim payment in the current financial year. With 81 per cent of revenue generated outside the UK, Wolseley is proposing to create a new holding company which is UK listed, incorporated in Jersey and with tax residence in Switzerland. Analysts are currently reviewing forecasts.
| WOLSELEY (WOS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,499p | MARKET VALUE: | £4.3bn | |
| TOUCH: | 1,498-1,500p | 12-MONTH HIGH: | 1,742p | LOW: 1,155p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 1076p* | NET DEBT: | 11% | |
| Year to 31 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 14.2 | 769 | 379 | 123 |
| 2007 | 16.2 | 634 | 306 | 135 |
| 2008 | 14.8 | 399 | 134 | 112 |
| 2009 | 14.4 | -766 | -348 | nil |
| 2010 | 13.2 | -328 | -130 | nil |
| % change | -8 | - | - | - |
*Includes intangible assets of £1.81bn, or 637p a share | ||||
