Exchange rate boost lifts Wolseley first quarter

Global plumbing supplier Wolseley said 2016 first quarter revenues were up 5.3% to £3.5bn while trading profits increased 6% to £250m. Both were assisted by positive exchange rate movements.

The company said there was one fewer trading day in the period which represented about £6m of trading profit. Exchange rate movements increased revenue by £45m and trading profit by £6m.

Chief executive Ian Meakins said market conditions were “mixed” with the company achieving “good growth” in decent US commercial and residential markets, partly offset by weaker industrial markets, which account for about 15% of US revenue.

Meakins said industrial markets continued to be impacted by a weak oil and gas sector and the strength of the US dollar. Acquisitions contributed another 1.8% of revenue growth. Trading profits rose £22m to £196m, including £10m of favourable exchange rate movements.

Nordic growth was also positive as the construction market continued to improve. Like-for-like revenue was 5.5% ahead with growth in each country. Gross margins were broadly consistent with last year. Trading profit in constant currency was £1m ahead, though the adverse impact of exchange rates was £2m.

In the UK Like-for-like revenue was 1.1% lower as repairs, maintenance and improvement markets remained weak. Trading profit fell 21% to £19m.

Acquisitions made last year contributed a further 4% to revenue growth, but gross margins were weaker and costs included some additional investment in marketing and IT capability.

Net debt at 31 October 2015 was £990m against £858m a year ago after the company purchased 3.2m shares for £121m.

Guidance for the full year remains unchanged, Meakins said, with the company expected to make “continued progress”.