Wolseley delivered an encouraging first-half performance thanks to a better trading climate in the US, where the plumbing and heating supplier is gaining market share. But this was offset to some extent by continued weakness in European markets, where there is little prospect of a recovery in the near term. And until Europe recovers, scope for a further re-rating of the shares looks limited.
Revenue in the US, which account for 43 per cent of the group total, rose by 9 per cent, including price inflation of around 4 per cent. The better tone was helped by a modest recovery in new construction and a resilient repair, maintenance and improvement sector. So while operating expenses here were up 7 per cent, with the benefit of higher margins trading profits raced ahead 18 per cent to £173m.
Trading in the UK was much tougher, with sales falling 3 per cent on a like-for-like basis, although a more favourable sales mix meant that, even after restructuring charges of £3m, trading profits only fell 8 per cent to £44m.
Numis Securities is forecasting full-year pre-tax profits of £629m and EPS of 163p (2011: £555m and 143p).
| WOLSELEY (WOS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,473p | MARKET VALUE: | £7.0bn | |
| TOUCH: | 2,473-2,476p | 12-MONTH HIGH: | 2,593p | LOW: 1,385p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 1,186p* | NET DEBT: | 16% | |
| Half-year to 31 Jan | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 6.63 | 195 | 47.1 | 15.0 |
| 2012 | 6.84 | 250 | 63.6 | 20.0 |
| % change | +3 | +28 | +35 | +33 |
Ex-div: 4 Apr Payment: 1 May *Includes intangible assets of £1.58bn, or 554p a share | ||||
