Wolseley to change name; H1 profits fall on weak Nordics

Plumbing and heating supplier Wolseley on Tuesday unveiled a name change, withdrawal from the Nordics and a fall in half year pre-tax profits.

The company said it would now be called Ferguson, in recognition of the US division that now pulls in 84% of group trading profit. It would still be using the Wolseley name in the UK and Canada for its more established operations.

Pre-tax profits for the period fell to £328m from £367m as revenues rose 24.5% to £8.46bn, boosted by £1.1bn due to the Brexit-battered pound. The profit fall came after a £102m impairment charge on the Nordic operation and exceptional costs of £124m.

There was a 10% rise in the in interim dividend of 36.67p a share.

Wolseley said it was now pulling out of the Nordics due to lack of synergy with the rest of its businesses.

"Like-for-like revenue growth since the end of the period has been about 4.5% for the group and 5.5% in the USA. Commodity deflation has been negligible in this period. We continue to execute our strategy of investing in profitable growth and expansion where appropriate while keeping tight control of the cost base. We expect the group to make further progress in the second half," the company said.

Shareholders will vote on the name change on 23 May 23. The company is also altering the group's presentational currency to dollars from sterling "to remove the largest driver of translation volatility and provide greater transparency of the underlying performance of the group".

Broker Peel Hunt said the name change and move to report in dollars was a "clear indication" that Wolseley was moving to a US listing.

"Given the pick-up in like-for-like growth in Q2 and the robust first half results, we think consensus estimates will creep higher. The bigger issue for the share price will be the possible US re-listing, the Nordic sale and likely UK disposal (or float?)," the broker said in a note.

After a strong run in 2016 the share price has done little in current year 2017. While we continue to think the rating looks high in a UK context, we also think that, if a US listing comes, then it will not look out of kilter with US peers such as Watsco, Fastenal, WW Grainger and MSC."

In a separate statement , Wolseley said Ferguson chief executive Frank Roach, would retire on 31 July. He will be replaced by chief operating officer Kevin Murphy.