Wolseley reveals buyback as final results hit forecast

Final results from plumbing supplier Wolseley were in line with expectations, as a strong performance from the USA helped lift earnings almost 10%.

Revenue of the ongoing businesses was up 6.1% in the year to 31 July compared to the previous year at constant exchange rates, including like-for-like growth of 4.2%.

The US achieved 11% growth in like-for-like sales in the fourth quarter, up from 9% in the third, as businesses there continued to strongly outperform their markets. US margins of 7.7% for the full year were a company record.

Chief executive Ian Meakins defended flat like-for-like revenue in the UK as resulting from management's focus on protecting gross margins.

"We faced headwinds in Continental Europe and have continued to take actions to protect profitability," he added.

Demand in the repairs, maintenance and improvement (RMI) markets grew modestly in most countries but while residential new construction markets were good in the USA they were weak in Europe.

Profit before tax rose 52% to £698m, as the business incurred a large exceptional charge the prior year.

Earnings per share rose 9.9% 196.2p, helped also by a lower finance charges, and the board lifted the dividend by 25% to 82.5p a share, as expected.

Commenting on outlook, Meakins said: "The overall like-for-like revenue growth rate for the group since the beginning of the new financial year has been broadly in line with Q4. Overall we expect the group's like-for-like revenue growth rate for the next six months to be about 5%."

Meakins also announced a £250m share buyback, the third consecutive annual return.

Broker Westhouse said the result was “in the ball park on an ongoing basis” and was slightly surprised by the buyback, having thought this was “a possibility rather than a probability”.

“Some two-thirds of analysts polled by Bloomberg had expected this - so the reaction could be more of relief than a positive surprise.”

Shares in Wolseley were up 0.8% to 3,282.15p at 10:00 on Tuesday.