views

Wolseley set to beat yearly profit target

SHARES in building supplies group Wolseley today shot up more than 11 per cent after it forecast that profits for the year to 31 July will beat market expectations.

The FTSE 100 group, which operates in the UK, US and mainland Europe, says that trading profit before exceptional items will exceed the £326m currently pencilled in by analysts.

However, this comes largely through its cost-cutting drive rather than improved trading conditions.

“The economic environment continues to provide limited visibility and demand is not consistent across our business units,” the owner of Build Center and Plumb Center said.

It is also reclassifying £10m of first half costs as exceptional.

In a resarch note, analysts at Panmure Gordon wrote: “A positive profit warning from Wolseley should help the share price in the near term. Sentiment, however, will continue to be affected by US housing data which we expect to remain volatile.”

Wolseley has been hard hit by the housing slowdown in both the UK and US with a number of its divisions still suffering badly in November.

At the end of last year, Wolseley announced it has axed another 500 jobs, mainly in the US, on top of the 10,000 roles cut the previous year. It then saw a management shake-up in January with the chief financial officer and head of Europe leaving the group.

It reported a pre-tax loss of £766m for its last financial year after write-downs and restructuring costs spiralled to more than £1bn.

Wolseley will post its results for the six months to 31 January on 22 March. The stock closed at 1,630p in London last night, an improvement of 12.49 per cent.