29th September 2015
As Wolseley reports its full year results Graham Spooner, investment research analyst at The Share Centre, explains what the plumbing and building supplier’s numbers mean for investors…
Having outperformed the market year-to-date, a 10% fall in the share price this morning may have caused Wolseley investors some indigestion over their breakfast cereal. The market appears to be concentrating on the fall in pre-tax profit as a result of a write down in its Nordic business. More significantly for investors, the group highlighted a challenging fourth quarter in parts of its all-important North American operations, which account for around three-quarters of its trading profit. Similar expectations for the remaining part of the year for industrial markets in the US, along with the competitive UK market, has led to the group cutting its first half sales forecasts for 2016.
On a more positive note, overall margins improved to a record 6.4% and the dividend rose by 10%. Additionally, there was steady growth in online sales and the group announced a £300mn share buyback scheme. Although we recommended Wolseley as a ‘buy’, investors should be aware that we are currently reviewing our recommendation on the group as a result of today’s figures.