Steady progress from Wolseley with a continuing good performance from the US being partially offset by tough conditions in Europe. Cost control and market share gains remain a feature, contributing to stable margins... With the share price having recently sailed through our target price we still believe it is right to lock in profits hence our cautious recommendation.
RBC CAPITAL MARKETS
Continued weak conditions in Europe combined with high expectations in the US are likely to limit the scope for upgrades... Although it is taking steps to cut cost in its Nordic business we believe that it will be unable to offset the full effect of declining volumes... We expect relatively steady performance in the UK and Central Europe, while the French business should continue to be weak.
The third quarter interim management statement was in line with expectations and not surprisingly showed a strong US performance, plus weak European environment and outlook. We expect the latter to lead to a reduction in top-end forecasts, but retain our estimates for this year and next. We do, however, increase our target price but retain a hold rating.