Wolseley plans £350m special dividend

For the year to 31 July 2012, Wolseley saw revenue from ongoing businesses rise 5% to £12.7bn and trading profit rise 10% to £658m.

Headline earnings per share of 168.4 pence was 17.8% ahead of last year. However, a £353m goodwill impairment charge relating to acquisitions in 2003 to 2007 pushed pre-tax profit down 49% to £198m.

UK sales, which account for 13% of group revenue, dipped 1% on a like-for-like basis. Demand in the heating market declined throughout the year, although demand for other product categories performed better. The company said that there was “no evidence yet of improving market conditions and therefore growth will only come from market share gains in the short term”.  Price inflation was 1%. The major business units of Plumb & Parts Center, Pipe & Climate Center and Drain Center gained market share.

Operating expenses were 3% higher including £4m of restructuring costs as headcount was reduced by 321 to 5,913.  Trading profit for the ongoing business of £92m was £3m ahead of last year after restructuring charges. The trading margin for the ongoing UK business was 5.5% (2011: 5.3%).

Wolseley has also invested £2m in a new e-commerce platform and on 1 August 2012 launched a consumer internet business for the UK market, www.tapoutlet.co.uk,using the infrastructure of its Build.com business in the USA. 

Chief executive Ian Meakins said: "The group continued to make progress in a year of slowing economic growth and considerable uncertainty in the Eurozone.  Underpinning this were three main factors: a continued focus on customer service in all of our business units, implementation of successful initiatives to drive like-for-like revenue growth, and our ongoing focus on operational efficiency which has delivered further improvements in the trading margin.”

He added: "We are committed to generating attractive returns for shareholders by maintaining strong capital discipline.  The board is recommending a final dividend of 40 pence per share which brings the total dividend for the year to 60 pence per share, a year-on-year increase of 33%.  Wolseley continues to be highly cash generative and we have adequate resources to fund future investment in the business alongside growth in ordinary dividends. We are today proposing a special dividend of £350m which reflects the group's strong financial position and our desire to maintain an efficient and sustainable balance sheet."

Commenting on the outlook, Mr Meakins said: "Demand across our markets remains mixed and the economic outlook continues to be uncertain. Revenue growth rates in the new financial year have been similar to the fourth quarter of last year. We will continue to reduce our cost base to protect profitability but also to make investments in our businesses that will improve the quality of our operations and generate growth in the future.  Whilst we remain cautious about the outlook for our markets, we are confident that Wolseley will make good progress in the year ahead."

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