Wolseley shy on disposals as Q3 profits climb
LONDON (Reuters) - World number one building supplies company Wolseley kept investors guessing about the future of underperforming parts of the business as it reported strong profit growth driven by its U.S. activities.
Chief Financial Officer John Martin said UK builder's merchant Build Centre was still under review along with other parts of the business and played down recent newspaper speculation that it was already up for sale.
"We will improve the performance of these businesses, and then either we classify them for retention in the group or sell them. We haven't recategorised Build Centre," Martin said after the company released quarterly results Wednesday.
He stressed that units under scrutiny would not necessarily end up on the auction block.
Build Centre had been seen as a likely disposal target, given its weak position in the UK market as the number four in general merchanting, and Wolseley's ongoing strategy to sell off non-core assets.
Shares rose over 3 percent Tuesday following speculation that three of its UK businesses -- Build Centre, Electric Centre and Encon -- were on the market, expected to bring in 300 million pounds.
The FTSE 100 company indicated in March it was looking at alternatives for its French plumbing and heating unit Brossette including a possible disposal. Martin said they would update the market on the sale process in October.
The world's largest plumbers' and builders' merchant said underlying operating profit soared to 131 million pounds in the third quarter ended April 30, from 101 million in the same period last year, broadly in line with expectations.
Like-for-like revenue rose 6 percent, thanks to demand in its repair, maintenance and improvement (RMI) units, while new residential construction, which accounts for 20 percent of group revenue, remained subdued in most regions.
Revenue growth was strongest in its largest market, the U.S., as well as France and the Nordics, Wolseley said, but was partly offset by weaker momentum in the UK and Canada.
Martin added that they are exploring a number of bolt-on acquisitions, which will not be incremental.
"We're looking at a number in the US, we're looking at a number in the Nordics, one or two tiny ones in the UK. There are probably one or two in France," he said.
"A lack of business disposal news has hit the shares in early trading...nonetheless, the figures have broadly matched expectations, with a recovery in the US continuing to lead the way," said Keith Bowman at Hargreaves Lansdown.
Shares in Wolseley were down 0.3 percent by 11:43 a.m.
(Editing by Matt Scuffham and Andrew Callus)
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