Wolseley ready to say au revoir to French operations

PLUMBING supplies giant Wolseley signalled its imminent exit from France as the sovereign debt crisis continues to heap problems on Europe.

The group revealed it is exploring strategic options for its French business as “difficult conditions” in continental Europe persist.

“Wolseley’s strategy is to focus on businesses where it can establish leading positions in attractive markets and consistently generate good returns for shareholders,” said the group, headed by chief executive Ian Meakins.

Sign up to our Business newsletter

Sign up to our Business newsletter

“In this context, we have decided to explore strategic options for the future of our businesses in France.”

The review raises the likelihood of a sale, closure or streamlining of the French business. It is consulting its workforce of more than 5,000 in France.

Wolseley’s French business, which includes do-it-yourself chain Reseau Pro and kitchen retailer Solutions Cuisines, accounts for around 10 per cent of group revenues.

It holds assets of about £500m and generated revenue of £1.3m in its last full year. In the three months to the end of April its revenues in France fell 6.1 per cent.

“In light of this review the appropriate carrying value of these (French) assets will be assessed at year-end and this is likely to give rise to a non-cash impairment charge,” said Wolseley.

Seymour Pierce analyst Kevin Lapwood suggested a closure is most likely. “It now looks as if Wolseley is about to grasp the nettle and exit its operations in France,” he said. “A sale is unlikely in our view as had it been possible, it would have happened already. We therefore believe the company will opt to close a significant part or all of the French business.”

The company, which runs the Plumb Center and Ferguson brands, said it incurred one-off restructuring costs of around £20m since August 2011.

It also expects a non-cash impairment charge to hit its Danish business where conditions have also been challenging. It is reviewing the business’s £393m goodwill and intangible assets.

Wolseley generates £5.5bn a year in revenues from Ferguson and Build.com in the United States and £2.4bn from the UK.

It employs around 360 staff at its site in Ripon, North Yorkshire.

Panmure Gordon analyst Andy Brown said: “A review of its French operations suggests they are unlikely to form a long-term part of the group.”