Wolseley PLC (LON:WOS) saw its share fall this morning after a mixed trading update from the the plumbing and heating products firm, with good sales performances in the US residential and commercial markets countered by weak growth in the UK.
In a trading update for the three months ended April 30, the FTSE 100-listed group - which will change its name to Ferguson PLC at the end of July to better reflect the weight of its US operations – said its like-for-like revenue grew by 6.6% to £4.27bn.
The Plumb Center owner added that exchange rate movements increased revenue by £423mln, with growth at constant rates reduced to 4.6%.
READ: Wolseley unveils name change, Nordics exit as it posts profits rise driven by US growth
In the US, Wolseley reported like-for-like revenue growth of 8.5%, a third-straight quarterly improvement, but in the UK like-for-like revenues were 0.4% lower year-on-year impacted by rising inflation.
Wolseley noted that ‘repairs, maintenance and improvement markets remained weak’ in Britain.
Neil Wilson, senior market analyst at ETX Capital, said: “No wonder Wolseley is renaming itself Ferguson, the name of its US business that it is increasingly leaning on for any kind of revenue or profit growth."
He added: “Investors don’t seem overly impressed – shares dipped nearly 4% in early trading. But once the Ferguson name is adopted at the end of the July and the group starts reporting in dollars, the shares could get a bump if Wolseley does decide to list in the US, where it could trade at higher multiples.”
In early morning trading, Wolseley was the biggest FTSE 100 faller, losing 4.3%, or 209p at 4,675p.
Trading profit helped by exchange rate movements
Elsewhere in its statment, the group said its trading profit in the period rose by 9.5% to £254mln, up from £232mln a year earlier, also with a £29mln boost from exchange rate movements although two fewer trading days reduced profit by £17mln.
Meanwhile its gross margin of 28.5% was 0.1% ahead of last year, while its net debt of £1.132bn as at April 30 was in line with last year.
John Martin, Wolseley’s chief executive, said: "Revenue growth in the quarter was good with US residential and commercial markets growing well and industrial markets improving. The Nordics returned to growth and the UK was broadly flat.”
He added: "Since the end of the period revenue growth has been broadly in line with the third quarter, gross margins and cost control have been good. The Group expects trading profit for the full year to be in line with current analyst consensus expectations."