Overall, Wolseley’s third quarter revenue was down 13% compared to the same time last year. However, the majority of the Group's business units maintained or improved their market share in this quarter. The overall gross margin was 50 basis points down from the same time in 2008 and it is likely that this pricing pressure will continue.
As anticipated, net debt in the third quarter was higher at £1,223 million than in the second quarter (£959 million). The level of net debt is expected to be lower at the half year stage and should be further reduced by the second quarter in 2010.
According to Ian Meakins, group chief executive of Wolseley: “The overall trading environment continues to be extremely tough and we remain firmly focused on driving operational performance.”
Ferguson’s Woes
In North America, third quarter revenue was down 17% compared to the same time last year. Trading profit was down by around 44% reflecting lower profitability in Ferguson. On a constant currency basis, revenue and trading profit were around 24% and 49% respectively, lower than the corresponding period in the prior year.
Ferguson experienced a further decline in the Commercial and Industrial market in the third quarter due to continued shortage of funds for project financing available. However, most of the Residential markets are showing increasing signs of stabilization. Revenue in local currency for the third quarter was down around 26% and underlying trading profit excluding property profits for the quarter was down around 47%.
The gross margin was marginally lower compared to the first quarter of FY2009 and it is likely that the increasing pricing pressure will continue.
Local currency revenue for Wolseley Canada decreased by around 16% with trading profit down around 33% due to the lower level of sales and a lower gross margin.
