Wolseley revenue rises in Q3 but gross margins remain under pressure
Weak market conditions throughout Europe put gross margins under pressure at plumbing and heating products distributor Wolseley.
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In the three months to 31 October revenue at constant exchange rates rose 9.8%, including like-for-like growth of 6.6%, to £3.55bn, while the company said gross margin of 27.5% was in line with last year.
Trading profit of the ongoing business at constant exchange rates rose 13.5% year-on-year to £235m and first-quarter trading margin improved by 20 basis points to 6.7% for the ongoing business.
"Wolseley has continued to generate strong revenue growth across all businesses and all regions in the USA with double digit growth for the second consecutive quarter,” said group’s chief executive Ian Meakins.
“Central Europe and France declined due to continued weak market conditions. While we held our gross margins overall, there remained substantial pressure on gross margins throughout Europe.
The firm added a curb on operating expenses resulted in good flow-through to trading profit in the ongoing businesses, while cash generation was strong as it continued to invest in technology and new business models.
Wolseley said it completed four acquisitions during the three-month period with total annualised revenue of £26 and that, since the end of the period, it has agreed the disposal of a small non-core business in the USA for £19m.