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Wolseley
Wolseley was the top FTSE 100 riser in morning trading, with shares up 2.5%. Photograph: Andrew Paterson/Alamy
Wolseley was the top FTSE 100 riser in morning trading, with shares up 2.5%. Photograph: Andrew Paterson/Alamy

Wolseley profits soar on US growth

This article is more than 10 years old
Plumbing and building materials company to return £300m to shareholders after benefiting from strong US housing market

Wolseley, the plumbing and building materials company, plans to return £300m to shareholders after benefiting from a strong US housing market and shrugging off concerns over the government shutdown in the world's largest economy.

The US market, which accounts for just over half of group revenues, was the stand-out performer for the company in the year to 31 July, helping to drive a sharp rise in pre-tax profits to £473m from £198m. Revenue rose 4.1% to £12.8bn.

Reflecting its bullish mood the FTSE 100 company announced a £300m special dividend, which is expected to be paid in December.

It was the top FTSE 100 riser in morning trading, with shares up 2.5%.

A good performance in the US was supported by more modest improvement in the UK and Canada, but Wolseley said trading in Europe, where it has closed businesses and cut jobs, remained tough.

The group profit figure was helped by lower exceptional charges this year associated with the restructuring of some of its businesses, but it was also boosted by an 8.2% rise in US revenues and improved margins. Work on new-build housing in the US continued to recover during the year and Wolseley also benefited from the strengthening market for repairs and improvements in existing properties.

In terms of current trading Wolseley said its US markets continued to "grow steadily".

The chief executive, Ian Meakins, brushed off the idea that the US government shutdown triggered by political deadlock on Monday night would have a significant impact on business.

He said that despite the prolonged speculation over stalemate, the impact on Wolseley had been minimal.

Referring to the latest developments he said: "Bluntly we are not anticipating much of an impact from the latest set to."

In the UK, which accounts for 14% of group revenue, Wolseley said the business performed well despite tough market conditions.

Meakins said that there was a "general improvement" in consumer confidence in the UK, and signs of "early recovery", although it was too early to say what impact the government's Help to Buy scheme would have.

Revenues in the UK rose 2.5% as new residential construction and the home improvements markets strengthened.

Turning to Europe, Meakins said Wolseley would continue to cut costs against a difficult trading backdrop.

"Economic conditions in continental Europe are very challenging and we expect them to remain so for the foreseeable future," he said.

Revenues were down 9.1% in France in the full year and 2.5% lower in central Europe.

Wolseley recommended a final dividend of 44p per share, bringing the total for the year to 66p per share, a increase of 10% compared with a year earlier.

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