FTSE in the red whilst Wolseley smashes targets
Wolseley, the world’s biggest supplier of plumbing and heating equipment, has topped the blue-chip index after reporting its third quarter revenues were up 16.6% to £3.3 billion and its trading profit was up 29.1% to £195 million1.
Although business in the US had slowed, partly due to the weather, growth in the UK and Europe was strong. Over the next six months, a 6% sales growth is forecast and full year profits are predicted to fall in line with expectations.
Barclays said: “Wolseley’s trading profit in the third quarter was easily better than our expectations due to strong like-for-like growth, good margins and some one-off benefits. This has left management comfortable with full year consensus trading profit of £864m.
The encouraging features from our point of view are that growth in the US continues to hold up well and that an improvement in like-for-like growth in the UK and the Nordics has not come at the expense of margin this quarter.
Wolseley is our top pick in the sector as we believe there is a multi-year opportunity for the business to gain market share across the USA. This would consolidate its leading position, dampening the cyclicality of its business and help deliver double-digit earning per share growth for several years.”
Overall, the FTSE 100 is under pressure because of continuing concerns about the financial situation in Greece and Europe’s inflation figures, hence this victory for Wolseley is particularly significant and demonstrates the power of the plumbing and heating sector.
1 The Guardian, 2015. FTSE falters but Wolseley bucks trend. [Online] Available at: http://www.theguardian.com/business/marketforceslive/2015/jun/02/ftse-falters-but-wolseley-bucks-trend. [Accessed 2nd June 2015].