Wolseley restores dividend as firm confident of growth

WOLSELey, the world’s biggest plumbers and builders merchant, yesterday showed it was confident of achieving growth in patchy construction markets by reinstating its payout to shareholders.

The company, which trades in the US, Britain, Canada and 22 other countries, said although markets have broadly stabilised it faced fragile economies in several regions and pressure from competitors to cut prices.

Chief executive Ian Meakins said: “The group expects to continue to grow in the second half of the year, though the comparatives will now be much more demanding,”

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Wolseley, which has an office in Ripon, North Yorkshire, said it would pay an interim dividend of 15p per share, which it expected to be one-third of the total for the year, having not made a payout the year before.

“The group’s restructuring, aided by low interest rates and a recovery in construction markets remains the core story,” Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers wrote in a note.

Trading profit in the six months ended January 31 rose 64 per cent, helped by stabilising markets, particularly in areas such as repairs and maintenance and new housing, the company said.

Mr Meakins said VAT increases and Government spending cuts in Britain left the outlook more uncertain.

It expected a slowdown in the coming months.

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Public sector spending represents about 25 per cent of its UK revenue.

Wolseley posted a 5 per cent increase in like-for-like revenue to £6.6bn in its financial first half.

Trading profit which strips out exceptional items, amortisation and impairments rose to £275m versus £167m in 2010.

The company, which has re domiciled to Switzerland in order to lower its tax rate, said as part of a restructuring, five of its businesses, including its French plumbing and heating company Brossette, were for sale, with decisions on the future of six others still to be made.

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Mr Meakins said the company was considering small bolt-on deals to strengthen its core market share.

The group reported net debt at January 31, 2011 of £714m.

Wolseley can trace its roots back to the work of entrepreneur Frederick Wolseley, who was born in Dublin and emigrated with his family to Australia as a 17-year-old in 1854.

In 1887, he founded the Wolseley Sheep Shearing Machine Company in Sydney, Australia. He moved to England in 1889 and established a manufacturing base in Birmingham.

In recent years, Wolseley has grown organically and by acquisition.