More on Wolseley
Wolseley: Fy05 results
Plumbing and heating products distributor, Wolseley said group operating profits for the year to July 2005 rose by 20% to £677.4m. Sales increased by 14.2% to £11,257.7m, trading margin increased from 6.1% to 6.4% and operating cash flow more than doubled to £763.6m (2004: £325.2m) in what looks to have been a splendid year.
The growth was led by a strong performance in North America. The North American Plumbing and Heating division reported a 13.9% growth in sales while trading profit increased by 17.7% from £252m to £296.5m. The US building materials distribution business, reported a 10% growth in sales and a 25.9% growth in trading profits to £130.9m.
Despite relatively flat markets, European distribution benefited from a good performance in the UK as well as acquisitions. Sales increased by 9.2% (2.7% was organic), while trading profit rose by 11.5% from £263.2m to £293.4m.
The company’s performance this year has been impressive. Growth next year is expected to be driven by a further strong performance in the US housing market. Reconstruction work following the hurricane season may provide a short-term boost. Longer term, the US housing market is expected cool.
In Europe, the company expects fairly flat markets and seems to be looking to “business improvement initiatives” or cost control to deliver growth.
The share trades at 1156p, on a prospective PE (2006 earnings) of 12.4x, which is high for the sector. The yield is 2.6%.
Random picks: Amvescap | Easyjet | Kesa | Severn Trent | Stanley Leisure | Tomkins | Ultra Electronics | Anglo American | Singer & Friedlander | Trinity Mirror