Profits return yet Wolseley still cautious

Kasmira Jefford
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WOLSELEY, the world’s biggest distributor of plumbing and heating products, swung back into profit for the first time in three years after increasing sales and cutting down on costs.

The FTSE 100 group, which operates the Plumb Centre and Ferguson chains in Britain and the US, said underlying profit in the year to the end of July rose to £622m from £450m the previous year, driven by a five per cent rise in like-for-like sales.

Chief executive Ian Meakins warned that the broader picture for the industry remained tough as uncertainty prevailed around the US property recovery.

“Recent economic forecasts have weakened and over time this is likely to have an impact on our markets,” he said in a statement, but reassured that the group was “in good shape”.

The company recently sold its French distribution division Brossette and its UK-based Build Centre business for £310m to Saint-Gobain, as part of a disposal strategy.

Wolseley will put the proceeds towards its goal of wiping off all of its debt by the end of 2012 from a current adjusted net debt level of £490m.

The group is also planning to spend up to £200m on bolt-on acquisitions across 25 countries, Meakins said.

Shares closed down 1.3 per cent to 1,516p last night.

Seymour Pierce analyst Kevin Lapwood said: “There was some disappointment that the outlook was getting worse but I think you have got to take some comfort that the balance sheet is in much better condition.”