24th Mar 2015 07:35
LONDON (Alliance News) - Wolseley PLC Tuesday said its pretax profit fell by two-thirds in the first half of the financial year, as it booked a large impairment due to challenging market conditions in the Nordic region, but its closely-watched trading profit rose on the back of a strong performance in the US, by far its biggest market.
The building materials company reported a pretax profit of GBP103 million for the six months to end-January, down from GBP312 million a year earlier, as it booked a GBP245 million impairment for the DT Group business in the Nordics it bough back in 2006. It blamed challenging market conditions in the region and reduced expectations of future profitability at the business.
Excluding that, its closely-watched trading profit from ongoing businesses rose 11% to GBP390 million, from GBP351 million, as revenue rose 8.9% to GBP6.44 billion from GBP5.91 billion and its trading margin rose 20 basis points to 6.1%.
"This was driven by the US where all of our businesses strongly outperformed their markets and we achieved a record 7.9% trading margin. We generated better like-for-like revenue growth in Europe, despite challenging markets, as we invested in sales and marketing activity to stimulate demand. We are taking action to improve profitability in Europe in the second half," Chief Executive Ian Meakins said in a statement.
The company reported another hit from the strength of sterling. Its revenue would have risen 10.3% if exchange rates had remained constant, while trading profit from ongoing businesses would have risen 12.0%.
Still, Wolseley raised its interim dividend to 30.25 pence, from 27.50 pence a year earlier, on the back of a 13.3% increase in its headline earnings per share, a figure that strips out exceptional items and impairments.
Wolseley said it expects its like-for-like revenue growth rate to fall to about 6% in the second half of the financial year, compared with 7.8% growth in the first half, while it expects trading profit from the ongoing businesses for the year as a whole to be in line with the range of current analyst expectations.
The company said it is close to completing the sale of its French wood business and has started the sales process for the remaining French building materials business.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
WOS.L