Wolseley´s full-year revenues boosted by currency tailwinds

Currency tailwinds boosted Wolseley´s full-year revenues as the plumbers´ merchant announced the result of the strategic review for its UK operations.

Total revenues for 2016 jumped 8.5% to reach £14.43bn or by 4.2% in constant currency terms. Sales growth in like-for-like terms came in at 2.4%.

That drove a 43% rise in profits before tax to £727m.

Wolseley´s bottom-line was also helped by a sharp drop in impairments and exceptional items, from £264 to £96m.

Turnover at its e-commerce operations clocked in at £2.1bn.

Net debt on the other hand rose 16.3% to £936m.

Zug, Switzerland-based Wolseley also unveiled its UK turnaround and repositioning strategy, including the closure of 80 branches and one distribution centre at a cost of up to 800 jobs and £100m in restructuring charges.

The cash element of those charges would be paid out of working capital efficiencies and proceeds from disposals, the company said in a statement.

"Our review of UK operational strategy has identified opportunities to transform our customer propositions whilst simplifying our branch network and supporting logistics facilities to greatly improve service levels, drive availability and choice for customers and generate better returns for shareholders. Regrettably this will result in job losses which we will handle sensitively and minimise through redeployment and attrition as far as possible," group chief John Martin said.

A strategic review of its Nordic operations was also underway.

Earnings per share before extraordinary items increased 7.6% to 247.7p.

Wolseley said its pension liabilities under IAS 19 increased from £15m to £147m, chiefly due to lower interest rates on corporate bonds. The firm committed an additional £25m per year for its UK defined benefit pension plan, following the recent triennial valuation.

The company´s full-year dividend payout was raised 10.2% to 100p, but no new share buy-back authorisation was announced .

"We regard WOS as a high quality company, but see the share price as in the right area following the share price bounce which we believe now reflects WOS strong overseas positioning post the Brexit decision, a feature which investors are clearly focussed on," Numis´s Howard Seymour said in a research note sent to clients on 26 September.

"The market is likely to be reassured by the US growth rebound since May but trading remains a mixed picture with deflation continuing for a few more quarters and UK & Europe weaker, and some investors may be disappointed by no capital returns as acquisitions spend steps up. Valuation looks up with events on a 2016E PE of c. 16.5 times," was the vedict from Canaccord Genuity´s Aynsley Lammin and Matthew Walker.