Despite ongoing weak building conditions in Europe, lower impairment charges and an improving construction market in the United States have driven a more than doubling in profit for the world’s biggest trade distributor of plumbing and heating products.
In its latest announcement, Switzerland-based Wolseley Plc unveiled an increase in net profit before tax from £174 million in the year ended 31 July 2012 to £377 million in the financial year (to July) just passed.
Furthermore, while most of the improvement is related to a more than halving in charges relating to impairments and exceptional items, the Group’s trading (underlying) profit before tax of ongoing businesses still grew by 10.7 per cent from £665 million to £725 million.
In a statement, Wolseley group chief executive Ian Meakins said the results were driven by strong growth and record margins in the US as well as solid performances in Canada and Britain, albeit with the company having been forced to slash jobs in Europe to counter ongoing weakness in that market.
Looking forward, Meakins says revenue growth rates in the new financial year have thus far been similar to those of the fourth quarter last year and that momentum in the US market was set to keep going while an improvement in the UK operating environment was ‘encouraging.’
“However, economic conditions in Continental Europe are very challenging and we expect them to remain so for the foreseeable future,” he said.
Originally based in the UK, Wolseley changed its residency to Jersey, Switzerland in 2010 to take advantage of lower effective tax rates in that country.
Operating across both the US and Europe, it has 17 brands which occupy a top three position in their respective markets.
Around the world, the market for plumbing supplies is expected to be boosted in coming years as rising urbanisation in China and other nations that are becoming industrialised in Asia and Africa underpin greater demand for investment in sewerage systems (albeit with Wolseley having no exposure to these markets) and the construction recovery in America continues.
Over the five-year period to 2016, research firm ReportsnandReports expects overall compound growth across the globe in this area of 6.7 per cent, with the market reaching a value of nearly $US 80 billion by this time.