Wolseley, the FTSE 100 distributor of plumbing and heating products, has seen like-for-like revenue growth of 5% in the three months to the end of October, compared to the same period of 2010.
However, in today's update Wolseley says some gaskets it supplied in the US and Canada were incorrectly labelled "non-asbestos". In fact, some customers have found they contain more than the 1% level at which they can be classified as "non-asbestos". The firm blames a former supplier called Lortech Rubber and says it is writing to "certain customers" to inform them of the mistake.
In trading terms total revenues were £3,641m. On a like-for-like basis Wolseley's biggest market, the USA, was 10% up on the equivalent quarter of 2010 with revenues of £1,531m and a trading profit of £99m, a rise of 24% on 2010. The second biggest region for Wolseley were the Nordic countries which saw like-for-like growth of 3% and trading profits up 11%.
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The UK was noticably weaker than the rest of the business with like-for-like revenues down 3% and trading profit shrinking by 20% (to £24m).
Wolseley has reduced net debt by £118m since the 31st of July and it now stands at £587m.
Gross margin has risen slightly, up to 27.1%, 0.1% ahead of 2010.
Commenting on the outlook for the rest of the year Wolseley's chief executive Ian Meakins warned: "Given continuing macroeconomic uncertainty, trading conditions may get tougher in the coming months. We will remain vigilant on costs and continue to drive performance improvements, strong cash conversion and better customer service."
So far in 2011 Wolseley shares have broadly mirrored the FTSE 100 and at the close yesterday were 6.13% down over the year since January.
BS
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