US market drives growth at Wolseley - UPDATE

Like-for-like (LFL) revenue growth at plumbing merchant Wolseley continues to be polarised across its geographic regions, with growth in the US and Central Europe accelerating and declines in France and the Nordic markets worsening.

The first quarter of the financial year generated like-for-like revenue growth of 2.1%, from £3,325m to £3,471m.

Meanwhile, trading profit increased by 7.6% from £184m to £198m, slightly ahead of Seymour Pierce's £192m forecast.

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"Wolseley has continued to generate good growth in the USA and Canada though revenue has declined in Continental Europe as a result of continuing tough market conditions, particularly in the Nordics and France, and unfavourable currency movements," said Chief Executive Ian Meakins.

He said: "In the current macroeconomic environment we are working hard to protect gross margins and to drive further operating efficiencies to protect profitability."

The company's biggest market in the US, which accounts for around half of group revenue, saw 7.1% growth in LFL sales, up from 6.7% in the preceding three months as it continued to take market share.

LFL revenue growth in the UK slipped into the red, down 0.3% on the year before, compared with a 3.5% rise in the preceding fourth quarter. Demand in the UK heating market was weak, though trading profits managed to grow slightly in the division, the group said.

The Nordic region saw LFL revenue fall 4.8% in the first quarter (-2.9% in Q4) as construction markets and consumer sentiment weakened.

Meanwhile in France, the LFL revenue decline worsened from 5.6% to 8.2%. In July, the company announced its intention to "explore strategic options" for its French businesses, but there was no update on the sale in Monday's statement.

Analyst Kevin Lapwood from Seymour Pierce reiterated his 'hold' rating on the stock today.

He said: "The sale of the rest of the French business for a reasonable price could lead to further gains, but for the time being, the rating looks about right."