30th Sep 2014 08:26
LONDON (Alliance News) - Wolseley PLC Tuesday hiked its total dividend for the year to end-July by 25% and announced a GBP250 million share buyback programme, as a strong performance in the US and lower exceptional costs helped boost profit.
The plumbing and heating products distributor proposed a final dividend of 55.0 pence, taking its total dividend to 82.5 pence, up 25% from 66.0 pence the previous year.
Wolseley posted pretax profit of GBP698 million, up from GBP460 million a year before despite seeing revenue decline slightly to GBP13.13 billion from GBP13.15 billion. In the previous year, the company posted GBP164 million in exceptional costs, mostly comprised of restructuring and redundancy costs as it reorganised its businesses in Central Europe, France and the Nordic region.
The company said it had seen a good overall result as market conditions in the US improved, although demand remained weak in Europe and Canada. Residential new construction markets were good in the US, and weak in Continental Europe.
Gross margins improved to 28.1% from 27.9% as the company focused on higher value-added products and services, and improving its purchasing terms.
In the US the company saw revenue up 8.2% on a like-for-like basis, with a trading margin of 7.7%, improved from 7.3%. Acquisitions contributed 1.1% of revenue growth, Wolseley said. It added 7 new branches during the year, with a further 24 additions coming from acquisitions. It acquired four businesses during the year with total yearly revenue of GBP184 million in the US.
In Canada, like-for-like revenue fell 0.8%, as growth in the West offset weakness in Quebec. UK like-for-like revenue dropped 0.1%; new residential construction grew strongly, but growth in residential RMI markets remained modest.
In the Nordics like-for-like revenue was up 0.4%, as market conditions improved a little in Denmark, and it saw good growth in Denmark, although conditions remain challenging in Finland.
In Central Europe and France, like-for-like revenue was down 1.9%, as the market remained weak in Switzerland and in the Netherlands, and the French new residential construction market declined.
Wolseley said that its overall like-for-like revenue growth rate since the beginning of the current financial year has been broadly in line with the fourth quarter. It expects its like-for-like revenue growth rate in the first half to be around 5%.
"Wolseley continues to be highly cash generative, and we have adequate resources to fund future investment in the business, including bolt-on acquisitions and growth in ordinary dividends." said Chief Executive Ian Meakins in a statement, adding the GBP250 million share buyback programme announced Tuesday "reflects the group's strong financial position and management's confidence in the business".
Wolseley said it intends to complete the share buyback programme within the next 12 months.
Shares in Wolseley were trading up 0.8% at 3,282.00 pence Tuesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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