Wolseley bouncing back

Plumbing supplies firm Wolseley said its first quarter trading performance was slightly ahead of expectations.Revenue in the three months ended 31 October rose 2% to £3,471m from £3,395m the year before. Like for like (LFL) sales grew 4%.Central Europe was the only region to show a fall in LFL sales; revenue there dipped 3% on a LFL basis. The USA and Canada achieved LFL sales growth rates of 6% and 7% respectively, the UK and Nordics grew LFL sales by 5% and 4% respectively, while LFL sales in France were up 2%.Gross profit edged up 2% to £938m from £916m the year before, while trading profit surged 39% to £159m from £114m (restated), as a result of revenue growth combined with careful control of gross margins and costs.Operating costs were £23m lower than last year principally due to disposals.Gross margin was 27.0%, 0.2% ahead of last year after adjusting for disposals.In the key US market, demand in the Residential and RMI (repairs, maintenance and improvement) markets continued to improve, and the business "made good progress in the Industrial and Waterworks sectors," but demand in the Commercial sector remained subdued. Trading profit in the UK & Ireland of £30m was up from £23m last year, thanks to the company jettisoning its Irish operations and a lower cost base.Net debt at 31 October 2010 was £681m, down from £1,223m at the end of October last year. "Whilst demand has improved in most countries, pricing competition has remained intense. We continue to focus on improving customer service, growing market share, driving efficiencies and generating strong cash flow," said chief executive Ian Meakins.