Wolseley announces £300m buyback, says market conditions tough

The building materials distributor released its full year results to 31 July 2015 on Tuesday.

It posted an increase in revenue from £12.27bn to £13.33bn, driven by a combination of a record trading margin in Ferguson as well strong growth in e-commerce, with it now accounting for 13% of group revenue at £1.7bn.

Revenue also grew 7.2% to £1.99bn in the UK despite a challenging market.

That all led to a trading profit of £854m, up from £752m the previous year. However pre-tax profits took a hit, down £168m to £508m reflecting impairment and exceptional items of £242m and increased finance charges of £48m.

Read more: Investors demonstrating "cold-bloodedness" over Wolseley, says Accendo

Wolseley chief executive Ian Meakins said Ferguson was a highlight.

"We achieved strong like-for-like revenue growth ahead of the market and a 50 basis point improvement in the trading margin to 8.2%, which is a record.

“We continue to face some challenging markets in the rest of the group and remain focused on improving growth rates and protecting gross margins whilst keeping the cost base tight.”

Meakins said the group expects to make “continued progress” in 2016.

"We expect to generate like-for-like revenue growth of about four percent in the first half.

“In the US we expect continued good growth in Blended Branches, Waterworks, HVAC, B2C and Fire and Fabrication underpinned by decent Commercial and Residential markets.

“We expect a continued steady recovery in Nordic markets, although the heating market in the UK is expected to remain very competitive with little growth.”

The FTSE 100 listed company also announced it will undergo a £300m share buyback programme based on the group's strong financial position and management's confidence in the business, which will be completed within 12 months.

It has proposed a final dividend of 60.5p per share, payable on December 3.

Wolseley shares were down 494p (11.82%) to 3,685.00 at 1120 BST.