Trading Statement

RNS Number:2049U
Wolseley PLC
14 January 2004


                                  NEWS RELEASE
                                14 January 2004



                                  Wolseley plc
             Pre-Close Period Trading Statement for Interim Results


Wolseley plc, the world's largest specialist trade distributor of plumbing,
heating and building materials products issues its regular trading statement
prior to entering its close period. The interim results for the 6 months ending
31 January 2004 are due to be announced on 22 March 2004.


Overview

Business conditions in the group's principal markets have been broadly in line
with comments made in our AGM statement on 21 November 2003. However, the UK and
US distribution businesses have performed strongly, outperforming their local
markets.

On a constant currency basis, and including the effect of acquisitions, group
sales and trading profit for the five months ended 31 December 2003 are up by
25.2% and 26.5% respectively, compared to the equivalent period in the prior
year. After currency translation, group sales were up 23.1% and trading profit
up by 24.4%. The adverse currency translation effect on trading profit was #2.9
million. Overall, for the five months to 31 December 2003, the group has seen a
slight increase in the trading margin compared to the equivalent period in the
prior year.

Further details of market conditions in each of the group's business segments
are set out below.



North American Plumbing and Heating Distribution

The picture in the USA continues to vary both geographically and by market
sector but overall the business is performing strongly. Sales in local currency
in the US plumbing operations for the five months to 31 December 2003 are up by
more than 10%, and trading profit is up by more than 20%, on the prior year.
Virtually all of the growth is organic.

The industrial and commercial sector remains the weakest segment and is unlikely
to show any significant improvement before the second half of 2004. Housing
related activity has held up well, although, as previously reported, there has
been more emphasis on entry level housing compared to high end housing. The
repair and remodelling market remains strong and is becoming an increasingly
important element of overall construction spend in the USA.
An improvement in the net margin for the five months to 31 December 2003
compared to the same period last year was achieved principally due to increased
throughput at the distribution centres and focus on organic growth, despite the
costs of the integration of previously acquired US plumbing operations. A new
distribution centre at Richland in the State of Washington was opened in
November 2003. The business remains on track to achieve a 6% trading margin in
this financial year, a year ahead of schedule.

The Canadian market is recovering well from SARS, power cuts and forest fires.
Wolseley Canada has outperformed the market generally and in local currency
terms achieved a double-digit increase in sales over the same period in the
prior year. Trading margin, however, was slightly down as a result of
acquisitions and investment in infrastructure in order to sustain future growth.



US Building Materials Distribution

Encouragingly, aggregate US housing starts remain robust and the inventory of
unsold houses at around 4.1 months, compares favourably to the long-term average
of around 6 months. However, the wide regional variations, previously reported,
continue in this business with certain markets still softening.


Commodity lumber prices, which directly affect approximately 40% of Stock
Building Supply's product range, recovered in the period largely due to supply
problems resulting from forest fires in Canada and a weaker US$. For the five
months to 31 December 2003, average lumber prices of $340 per thousand board
feet were 20.6% up on the prior comparable period average of $282 per thousand
board feet. Higher lumber and structured panel prices have had the effect of
increasing Stock's local currency sales by $178 million (16.1%) in the current
five-month period compared to the same period in the prior year.

The restructuring of this business to achieve improved market focus and reduce
the cost base is on track. These measures are still expected to achieve cost
savings of $5 million in this financial year and $10 million in 2005.

Overall, mainly due to lumber and structured panel price increases and
acquisitions, sales in US$ were up more than 20% for the first five months and
trading profits were up more than 30% compared to the same period in the prior
year. Organic growth of more than 3% was achieved in the first five months.


European Distribution

The UK has been the most positive of the European markets which the group
services, in the current financial year where demand in the repairs, maintenance
and improvement sector remained strong. Despite the weakness in the industrial
and commercial markets, Wolseley's UK operations recorded double-digit sales and
trading profit growth in the first five months, with organic growth of more than
6%. The trading margin maintained the upward trend of the second half of the
last financial year.

The markets across the Continental European businesses continue to be broadly
flat and are likely to remain so for the remainder of this financial year.
However, the majority of the group's businesses are showing sales growth. Profit
growth was achieved in France, Italy and Luxembourg.

Sales in Brossette, France, were up on last year mainly as a result of
acquisitions. The benefits from an improvement in public works programmes
compensated for the effects of the poor industrial environment. The trading
margin improved slightly.

Both Pinault Bois & Materiaux ("PBM"), which was acquired on 7 July 2003, and
Tobler, which was acquired on 1 December 2003, performed in line with
expectations. Good progress is being made in identifying and delivering
synergies between PBM and other Wolseley group companies.

Financial

The group's financial position remains strong with group gearing, as at 31
December 2003, of around 55% at current exchange rates (compared to 46.6% at 31
July 2003). The higher gearing reflects acquisition spend of #67 million in the
five months to 31 December 2003 and increased working capital necessary to
support strong business growth. The interest charge is higher than the
corresponding period in the prior year, reflecting the acquisition spend partly
offset by lower interest rates and additional cashflow.


Outlook

Prospects for further good progress in the second half are encouraging. Whilst
the translation effect of the weak US$ impacts upon the reported results, the
underlying performance of the group remains strong despite mixed market
conditions. These factors are unlikely to change significantly in the short term
although as the US economic recovery continues to gather pace, this should
present further opportunities for growth. The Wolseley board is confident that
the group's strong financial position, combined with its strategy to deliver
value enhancing opportunities from organic and acquisitive growth, will continue
to stand the group in good stead over the long term.

Charlie Banks, Group Chief Executive of Wolseley said:

"We are delighted with the first five months performance and we are optimistic
about the prospects for the remainder of the financial year. The underlying
performance of the group remains strong demonstrating the resilience of our
business arising from our wide geographic spread and broad product base. With a
tight focus on costs and a strong balance sheet, Wolseley is well placed to
deliver its growth strategy both organically and through bolt on acquisitions."



Exchange Rates

The average profit & loss account translation rate for the first five months was
$1.6654 to the #1 compared to $1.5696 for the comparable period last year, a
fall of 5.8%, and Euro1.4297 to the #1 compared to Euro1.5736 a rise of 10.1%. Should
the exchange rates between the US$ and the #, and the Euro and the #, remain at the
January forward rates ($1.8453 and Euro1.4351) then the averages for the year as a
whole would be $1.7704 and Euro1.4328 and this would have the effect of reducing
sales and trading profit for the first five months of the year by a further
#132.8 million and #7.4 million, respectively.

Trading profit, a term used throughout this announcement, is defined as
operating profit before goodwill amortisation. Trading margin is the ratio of
trading profit to sales stated as a percentage.

This Trading Statement contains certain forward-looking statements as defined
under US legislation (Section 21E of the Securities Exchange Act of 1934). By
their nature, such statements involve uncertainty; as a consequence, actual
results and developments may differ from those expressed in or implied by such
statements.



FURTHER INFORMATION:

Wolseley plc                                             Brunswick Group Ltd

Tel: [phone]                                       Tel: [phone]

Steve Webster - Group Finance Director                   Andrew Fenwick
Guy Stainer - Head of Investor Relations                 Sophie Fitton



There will be analyst/investor meetings today at 9.00 a.m. and 11.30 a.m. taking
place at UBS, 100 Liverpool Street, London, EC2.

A dial-in facility will be available for these meetings:

Meeting at 09.00:      UK and international dial-in       [phone]
                       US dial-in                         1 334 420 4950

Meeting at 11.30:      UK and international dial-in       [phone]
                       US dial-in                         1 334 420 4950

                                   - Ends -




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