Wolseley PLC Q1 Interim Management Statement (0200R)

TIDMWOS

RNS Number : 0200R

Wolseley PLC

06 December 2016

6 December 2016

Interim Management Statement for the 3 months to 31 October 2016

 
 GBP million           Q1      Q1   Change       Change   Like-for-like 
                                                              change(2) 
                     2017    2016                   (at 
                                               constant 
                                               exchange 
                                                 rates) 
=================  ======  ======  =======  ===========  ============== 
 Revenue - US       2,945   2,256   +30.5%        +8.9%           +4.2% 
 Revenue - other 
  regions           1,424   1,300    +9.5%       (1.8%)          (2.9%) 
=================  ======  ======  =======  ===========  ============== 
 Revenue - total    4,369   3,556   +22.9%        +5.2%           +1.8% 
 Trading profit 
  (1)                 303     250   +21.2%        +1.4% 
 Trading days          66      65 
 Net debt           1,169     990 
 

First quarter highlights

- Revenue 5.2% ahead of last year at constant exchange rates, including like-for-like growth of 1.8%.

   -       Gross margin of 28.3% was 0.3% ahead of last year. 
   -       Trading profit of GBP303 million was 1.4% ahead of last year at constant exchange rates. 

- Movements in foreign exchange rates increased revenue by GBP599 million and trading profit by GBP48 million. Commodity price deflation reduced revenue by 1.3%.

   -       Net debt at 31 October 2016 of GBP1,169 million, 1.0x EBITDA. 

- Four acquisitions completed in the quarter, and one since the quarter end, for total consideration of GBP216 million.

Commenting on the results, John Martin, Chief Executive, said:

"US like-for-like revenue growth was 4.2% with commercial and residential markets continuing to grow well and industrial markets steadying. Good volume growth was partly offset by the ongoing impact of commodity price deflation which reduced the US revenue growth rate by 2.4%. Our other markets were more challenging as the UK heating market was weak and Nordic construction markets deteriorated. While revenue growth trends have improved slightly we continue to manage costs and productivity very carefully while continuing to drive customer service and strong cash conversion."

Group results

During the quarter the Group generated revenue of GBP4,369 million, 5.2% ahead of last year at constant exchange rates and 1.8% ahead on a like-for-like basis, including 1.3% price deflation. Trading profit of GBP303 million was 1.4% higher than last year at constant exchange rates. There was one more trading day in the period which generated GBP6 million of additional trading profit. Exchange rate movements increased revenue by GBP599 million and trading profit by GBP48 million.

 
 (1)   Before exceptional items and amortisation of 
        acquired intangibles. 
 (2)   The increase or decrease in revenue excluding 
        the effect of currency exchange, acquisitions 
        and disposals, trading days and branch openings 
        and closures. 
 

The regional performance was as follows:

 
 GBP million            Revenue   Revenue      Change    Trading    Trading      Change 
                        Q1 2017        Q1         (at     profit     profit         (at 
                                     2016    constant    Q1 2017    Q1 2016    constant 
                                             exchange                          exchange 
                                               rates)                            rates) 
====================  =========  ========  ==========  =========  =========  ========== 
 USA                      2,945     2,256       +8.9%        251        196       +6.6% 
 UK                         499       510      (2.1%)         17         19     (13.2%) 
 Nordic                     582       503      (2.5%)         24         25     (18.6%) 
 Canada and Central 
  Europe                    343       287      (0.3%)         21         22     (17.6%) 
 Central costs                                              (10)       (12) 
====================  =========  ========  ==========  =========  =========  ========== 
 Group                    4,369     3,556       +5.2%        303        250       +1.4% 
--------------------  ---------  --------  ----------  ---------  ---------  ---------- 
 

Quarterly like-for-like revenue growth trends were as follows:

 
                                  Q1       Q2       Q3       Q4       Q1 
                                2016     2016     2016     2016     2017 
===========================  =======  =======  =======  =======  ======= 
 USA                           +4.5%    +4.0%    +5.0%    +3.1%    +4.2% 
 UK                           (1.1%)   (2.9%)   (0.4%)   (2.1%)   (2.9%) 
 Nordic                        +5.5%    +2.4%   (2.6%)   (2.3%)   (2.9%) 
 Canada and Central Europe    (2.8%)   (1.7%)        -    +0.3%   (2.7%) 
===========================  =======  =======  =======  =======  ======= 
 Group                         +3.2%    +2.3%    +2.8%    +1.5%    +1.8% 
===========================  =======  =======  =======  =======  ======= 
 

USA

Ferguson, our US plumbing and heating business, grew revenue by 4.2% on a like-for-like basis, including price deflation of 2.4%. Acquisitions contributed another 2.6% of revenue growth. All businesses generated like-for-like revenue growth in the quarter with good growth across residential and commercial markets. Industrial like-for-like revenues recovered somewhat from last year. Gross margins were ahead of last year and operating costs were 10.9% higher at constant exchange rates, including 3.0% from acquisitions. Trading profit of GBP251 million was GBP55 million ahead of last year including GBP39 million due to favourable exchange rate movements. Four acquisitions were completed in the quarter, and one since the quarter end, with total annualised revenue of GBP142 million.

UK

Like-for-like revenue in the UK was 2.9% lower than last year. Repairs, maintenance and improvement markets remained weak. Despite very competitive markets gross margins were ahead of last year and trading profit of GBP17 million, was GBP2 million behind last year. Employee consultation regarding the turnaround and repositioning strategy announced in September is underway.

Nordics

In the Nordic region like-for-like revenue declined 2.9% as construction markets deteriorated. Gross margins were weaker with trading profit at constant exchange rates GBP5 million behind. The favourable impact of exchange rates was GBP5 million. As announced in September we have initiated a review of the Nordics operating strategy, and this is progressing well. We will announce our findings in the spring.

Canada and Central Europe

Like-for-like revenue in Canada and Central Europe was 2.7% behind last year. Gross margins were weaker and operating costs were 2.3% ahead at constant exchange rates. Trading profit of GBP21 million was GBP1 million behind last year including a GBP4 million benefit from favourable exchange rates.

Financial position

Net debt at 31 October 2016 was in line with our expectations at GBP1,169 million (31 October 2015: GBP990 million). The final dividend of GBP167 million was paid to shareholders on 1 December 2016. Total acquisition investment in the period was GBP206 million with a further GBP10 million since the quarter end. There have been no other significant changes in the financial position of the Group.

Outlook

Like-for-like revenue growth since the end of the quarter has been in line with the first quarter results. Markets continue to be mixed across the Group with some uncertainty in the economic outlook. We remain confident that Wolseley will make further progress in the year ahead and expect Group trading profit to be in line with analyst expectations at current exchange rates.

For further information please contact

Wolseley plc

 
 Dave Keltner, Interim Chief                      [phone] 
  Financial Officer                    Tel:        2230 
 Mark Fearon, Director of Corporate               +44 (0) 7711 
  Communications and IR                Mobile:     875070 
 Mike Ward, Head of Corporate                     +44 (0) 7984 
  Communications                       Mobile:     417060 
 

Brunswick (Media Enquiries)

 
                                        [phone] 
 Michael Harrison, Nina Coad    Tel:     5959 
 

Investor conference call

A conference call with John Martin, Chief Executive and Dave Keltner, Interim CFO, will commence at 09.00 UK time today. The call will be recorded and available on our website after the event www.wolseley.com.

 
 Dial in number    UK:             [phone] 
  Switzerland:                     [phone] 
 

Ask for the Wolseley call quoting 8916246.

Wolseley plc is the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials, operating in North America, the UK and Continental Europe. Revenue for the year ended 31 July 2016 was GBP14,430 million and trading profit was GBP917 million. Wolseley has about 39,000 employees, is listed on the London Stock Exchange

(LSE: WOS) and is in the FTSE 100 index of listed companies. For more information, please visit www.wolseley.com or follow us on Twitter https://twitter.com/wolseleyplc.

Financial Calendar

 
 Half Year Results   28 March 2017 
 Q3 IMS              20 June 2017 
 Full Year Results   3 October 2017 
 

Certain information included in this announcement is forward-looking and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements. Forward-looking statements cover all matters which are not historical facts and include, without limitation, projections relating to results of operations and financial conditions and the Company's plans and objectives for future operations, including, without limitation, discussions of expected future revenues, financing plans, expected expenditures and divestments, risks associated with changes in economic conditions, the strength of the plumbing and heating and building materials market in North America and Europe, fluctuations in product prices and changes in exchange and interest rates. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "believes", "estimates", "anticipates", "expects", "forecasts", "intends", "plans", "projects", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. Forward-looking statements are not guarantees of future performance. All forward-looking statements in this announcement are based upon information known to the Company on the date of this announcement. Accordingly, no assurance can be given that any particular expectation will be met and readers are cautioned not to place undue reliance on forward-looking statements, which speak only at their respective dates. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules, the Prospectus Rules, the Disclosure Rules and the Transparency Rules of the Financial Conduct Authority), the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

-ends-

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December 06, 2016 02:00 ET (07:00 GMT)