Wolseley shares drop 10 per cent

<p>The owner of Plumb Centre reported a 25 per cent fall in annual profits.</p>

Shares in Wolseley, the owner of Plumb Centre, dropped ten per cent during early trading.

The dip came shortly after the group reported a 25 per cent fall in full-year profits.

Pre-tax profits fell to £508 million for the year to July 31st - the company said this was largely due to the £234 million write-down in the value of the firm's underperforming operations in Denmark, Finland and Sweden.

The firm noted that its trading profits were up in the US. Around three-quarters of the group's earnings come from the US and it's expected that much of the US business will continue to see good growth.

Chief executive Ian Meakins said the plumbing supplies business in the US, called Ferguson, had seen "great performance" with like-for-like revenues up 9.6 per cent.

However, the industrial market, which represent 15 per cent of the company's revenue in North America, had been challenging during the fourth quarter and those challenges are expected to continue.

"We continue to face some challenging markets in the rest of the Group and remain focused on improving growth rates and protecting gross margins whilst keeping the cost base tight," Mr Meakins said.

In the UK, Parts Center, Pipe Center and Drain Center saw earnings fall six per cent to £90 million. These brands represent ten per cent of group trading profit.

Wolseley also said its UK heating business was remaining competitive "with very little growth".

Overall trading profit for ongoing business rose 14 per cent to £857 million and like-for-like revenues grew 7.1 per cent.

Looking forward

The company also warned that like-for-like revenue growth is expected to slow to four per cent in the first half of the new financial year. This is down from previous forecasts of six per cent, which were outlined in June.

"Wolseley continues to be highly cash generative and we have adequate resources to fund our capital investment programme, bolt-on acquisitions and growth in ordinary dividends. We are also announcing a £300 million share buyback which reflects the group's strong financial position and management's confidence in the business," Mr Meakins added.

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