March 17, 2008 - Wolesley, Ferguson Announce Interim Financial Results
New housing starts have continued to decline and the RMI
market has slowed in response to weaker consumer sentiment. This relates to the
sub-prime problems and concerns associated with the impact of the deteriorating
housing market on the U.S. economy. The commercial and industrial sectors
continued to hold up.
Ferguson produced another strong performance and
outperformed the market. Local currency revenue in the U.S. plumbing and
heating operations rose by 3.2% to $5,554 million (2007: $5,384 million) due to
acquisitions, with organic revenue being down 2.7%, meaning the growth was
mainly attributed to acquisitions, including the absorption of Wolseley Canada.
Trading profit was up by 4.9% to $350 million (2007: $333 million). Gross
margin was up, reflecting internal process improvement, changes of business mix
towards higher margin business generated from showrooms, counter sales and
private label products, and improved sourcing programs. The trading margin was
also slightly higher at 6.3% (2007: 6.2%), benefiting from the margin enhancing
acquisitions completed recently. In response to the slowing residential markets
in the first half, Ferguson reduced its headcount by 1,575. These reductions
equate to around 6% of its total employees and will give rise to annualized
savings of $75 million and brings the cumulative headcount reduction in
Ferguson to around 12% of its employees.