UK housing boosts Wolseley profits

HOMEOWNERS' decision to stay put and improve their properties has boosted profits at building and plumbers' merchants group Wolseley. The company, which runs the Plumb Center, Build Center and Hire Center chains, said trading profits were up by more than a quarter in last five months of 2004 with sales up 10% overall.

The company said that its UK division, which employs 12,000 people at 1,500 sites, had been the strongest performer of all its European divisions. The figures would have been even better without the impact of negative exchange rate movements, according to chief executive Charlie Banks.

He said that on a constant currency basis sales would have been up 15% and profits 30% higher. Banks said UK market conditions remained favourable, as did those in North America.

'The continued strength of our underlying growth emphasises the benefits of both our broad geographical reach and diverse product range. We look forward to the second half with confidence.'

Despite the cooling in the house market, Wolseley said its UK operation recorded double-digit sales and trading profits growth in the period. UK operations were helped by increased demand in the repairs, maintenance and improvement sector, while the commercial sector showed further signs of improvement.

However, it has already warned that higher pension and restructuring costs would impact on margins in the second half of its financial year. Earlier this month, the company said it planned to beef up its supply chain by setting aside £100m to build two new distribution centres.

It hopes to open a new national hub alongside its UK headquarters at Leamington Spa by the summer of 2006, as well as open a regional feeder centre in the North West to add to three other sites. In September, Wolseley announced annual pre-tax profits of £559.1m, a rise of 31% following sales of more than £10bn.

Wolesley shares rose on the stock market, moving up 3% - 34p to 1022p - after the results were published.