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www.wolseley.com

Q1 Interim Management Statement for the 3 months to the 31 October 2018

Ongoing businesses1 US$ millions  Q1 2019  Q1 2018  Change Organic change3 
Revenue 5,554  5,117 +8.5% +6.7%
Trading profit2 432  393 +9.9%  
Trading days 65  65 -  
Reported net debt to EBITDA 0.9x  0.5x    

First quarter highlights

  • Ongoing revenue 8.5% ahead of last year, including 6.7% organic growth.
  • Gross margin of the ongoing business was 29.6%, 0.5% ahead of last year.
  • Ongoing trading profit of $432 million was 9.9% ahead of last year.
  • Invested $284 million in acquisitions in Q1.
     

John Martin, Group Chief Executive, commented:

“Ferguson continued to perform well in the first quarter with good organic growth in the US of 9.6 per cent in supportive markets. Growth in the US was widespread across all geographic regions and major business units. Canada continued to grow against tough prior year comparatives and the UK also grew modestly on a like-for-like basis.

“Since the end of the quarter, the US has continued to grow well and the current indications are that growth will continue in the months ahead. As a result, we expect trading profit for the full year to be in line with analysts’ expectations.

“We will continue to execute our strategy of delivering excellent customer service to maximise profitable growth opportunities whilst remaining vigilant on costs. Our capital allocation policy is unchanged and we will continue to maintain a strong balance sheet.”
 

Group results

The Group generated revenue of $5,554 million in the first quarter, 9.0% ahead of last year at constant exchange rates and 6.7% ahead on an organic basis. Gross margin continued to improve, up 50 bps to 29.6%, as a result of recent acquisitions and the exit of low margin wholesale business in the UK last year. Operating costs were well controlled and trading profit of $432 million was 10.2% higher than last year at constant exchange rates. Exceptional costs of $6 million were incurred and related to the previously announced UK restructuring programme. There is one fewer trading day this year compared to 2018, which falls in the second quarter.

1) ‘Ongoing businesses’ excludes businesses that have been closed, disposed of or are classified as held for sale.
2) Before exceptional items and amortisation of acquired intangible assets.
3) The increase or decrease in revenue excluding the effect of currency exchange, acquisitions and disposals and trading days.

Regional analysis

Ongoing businesses US$ millions Revenue Q1 2019 Revenue Q1 2018 Change (at constant exchange rates) Trading profit Q1 2019 Trading profit Q1 2018 Change (at constant exchange rates)
US 4,607 4,112 +12.0% 400 363 +10.2%
UK 607 679 (9.5%) 19 21 (7.8%)
Canada 340 326 +8.9% 27 23 +24.8%
Central costs - -   (14) (14)  
Group 5,554 5,117 +9.0% 432 393 +10.2%

Quarterly organic revenue growth

Ongoing businesses Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
US +8.3% +9.1% +10.6% +11.4% +9.6%
UK1 +3.9% (1.7%) +0.7% (0.1%) +1.5%
Canada +7.2% +9.9% +4.7% +6.3% +3.3%
Group +7.5% +7.4% +7.1% +8.1% +6.7%

1 The UK revenue growth rate is presented on a like-for-like basis to remove the impact of closed branches and the exit of low margin business.