Tax, investments and pension rules can change over time so the information
below may not be current. This article was correct at the time of
publishing, however, it may no longer reflect our views on this topic.
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
Wolseley shares opened down 5.5%, as a decent third quarter performance was overshadowed by slowing like-for-like (LFL) growth. Wolseley report 5.9% growth in revenues at constant exchange rates, with trading profits up 12.2%. However, LFL revenues grew 2.8%, including a 1.4% impact from deflationary headwinds, compared to 7.5% a year previously.
Net debt rose slightly to £1,131m (2015: 1,127m) following the completion of a £252m share buyback.
The US business, Ferguson, accounted for 66% of group revenues and 89% of group trading profit. The division saw 5% LFL growth, including 2.3% price deflation, and trading profits increasing 17.4%. Gross margins were ahead of last year with operating costs up 6.6%. Lower commodity prices continued to impact industrial demand (13% of Ferguson revenues).
UK trading profits were in line with last year. LFL revenues were 0.4% lower than a year previously, although this represents an improvement on performance in the previous two quarters with acquisitions contributing 2.8% to headline revenues growth.
In the rest of Europe the Nordic region saw revenues fall 0.9% and trading profits fall 42% as adverse weather conditions and a reduction in tax incentives impacted spring sales. Gross margin was also weaker. Central Europe saw higher margins and lower costs offset a 0.2% decline in LFL revenue to deliver a 32% boost in trading profit at constant exchange rates.
Restructuring costs in the UK business generated £2m in additional costs, bringing the total for the first three quarters to £5m. The group has increased its expectations for full year restructuring costs in the UK and Europe to £20m.
Outlook:
The group continues to see subdued demand in several key markets, including the US. LFL revenue growth in the weeks since the end of the first quarter has continued to slow and is currently running at 1%. The group expects trading profits for the full year, before restructuring costs, to be in line with analyst expectations at current exchange rates.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.
The information on this website is not intended to be advice or a recommendation to buy, sell or hold any investment mentioned. No view is given as to the present or future value or price of any investment, and investors should form their own view in relation to any proposed investment.
Any information which could be construed as “investment research“ has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.
The research material provided on our website is not an offer to buy or sell any of the stocks mentioned. Hargreaves Lansdown accepts no responsibility for any use made of these comments and for any consequences that may result. We cannot guarantee the accuracy or completeness of the information provided and consideration has not been given to the personal circumstances of any investor. Therefore any person acting on it does so entirely at their own risk and must assess the suitability of any investment for their own personal circumstances and individual investment objectives. It is not a personal recommendation.
Although we are not specifically constrained from dealing ahead of any research material we do not seek to take advantage of it before it is provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients (including restrictions on dealing for writers of equity commentary).
Hargreaves Lansdown Fund Managers Ltd (HLFM) manages funds that may hold investments which are the subject of commentary prepared and published by other parts of the Hargreaves Lansdown group. Accordingly, appropriate organisational and administrative controls (including physical and information barriers, known as “Chinese Walls“) are in place between different parts of our business, including our marketing and fund management functions, in order to manage these potential conflicts of interest. For more information please see our Conflicts of Interest policy. HLFM currently manages three funds which hold individual equity securities. Details of the significant shareholdings held by these funds can be found here for the HL Select UK Growth Shares fund, here for the HL Select UK Income Shares fund and here for the HL Select Global Growth Shares fund. Hargreaves Lansdown (Nominees) Limited holds individual securities as nominee on behalf of underlying clients of Hargreaves Lansdown, and does not exercise control over or hold the beneficial ownership of these securities.
We do not intend to provide recommendations to buy, sell or hold particular investments, nor do we provide price targets. Our opinions on particular investments (and the facts underlying them) are valid as at the date of publication, but can change at any time, and we may not update our views on any particular investment on a regular basis. Accordingly such opinions and facts may become outdated or obsolete after the date of publication.
Issued by Hargreaves Lansdown Asset Management Limited, which is authorised and regulated by the Financial Conduct Authority (FCA Register number 115248, see FCA register for registration details) and registered in England and Wales No 1896481. Registered office: 1 College Square South, Anchor Road, Bristol BS1 5HL.
NaN (NaN%)