Strength of pound to hurt Wolseley results

WOLSELEY warned yesterday that the stronger pound was likely to affect its results this summer, as it posted a 10 per cent rise in quarterly profits.

Good growth in the United States and Canada, where the company generates around half of its revenues, meant Wolseley recorded trading profits of £139m for the three months to April 30.

But the progress was countered by tough trading conditions in Europe, particularly France, and from the company’s warning that profits growth in the current quarter will be affected if the euro continues to weaken against the pound.

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Wolseley employs around 360 staff at its base in Ripon, North Yorkshire.

Shares fell yesterday, despite the fact that Panmure Gordon stockbrokers said the third quarter trading figures were slightly ahead of its forecast.

Analyst Andy Brown said: “Its North American operations are performing well, with market share gains supplementing slightly better markets. European markets are more difficult.”

Trading profits in the UK were £3m higher in the quarter at £26m, reflecting lower bad debt charges and revenues growth of 1.9 per cent on an underlying basis due to better performances at Plumb Center and Parts Center.

In France, like-for-like revenues declined by 6.1 per cent as new construction markets weakened and the company warned that the end of recent Government stimulus activity would have an effect on activity levels going forward.

Trading profits in France were £6m below last year at £9m and included £1m of restructuring charges. In the United States, profits were up £19m to £95m and like-for-like revenues grew 9.4 per cent after most of the company’s key businesses lifted market share and the recovery in residential work continued.