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UPDATE 1-Wolseley expects revenue growth of 4 pct in next six months
June 3, 2014 / 10:03 AM / 3 years ago

UPDATE 1-Wolseley expects revenue growth of 4 pct in next six months

(Adds CFO, analyst comments)

By Li-mei Hoang

LONDON, June 3 (Reuters) - British plumbing supplies group Wolseley said it expected to revenue to grow by about 4 percent in the next six months, mainly driven by its biggest market the United States, and was on the hunt for bolt-on - or small - acquisitions.

The company, which operates the Plumb Center and Ferguson chains in the United States and Britain, made the forecast after posting a 5.1 percent rise in third-quarter revenue to 3.05 billion pounds ($5.11 billion), on a like-for-like basis. The increase was above its expectations.

Chief Financial Officer John Martin said most of the growth had been down to the United States, which accounts for two-thirds of revenue, as well as a pick-up in Nordic region. Trading in Britain and the rest of the Europe, however, had been tough, he added.

“We expect growth over the next six months, so two quarters, to be about 4 percent, that is slightly ahead of our long-term growth rate which is 3 to 4,” Martin told Reuters.

“There are no signs at the moment that the U.S. is going to change substantially in the near future and I think we would expect Europe to carry on being reasonably challenging,” he added.

Wolseley said it had been hit by foreign exchange movements, which wiped 12 million pounds off its trading profit for the period ending April 30. The company reported a 0.6 percent rise to 155 million pounds.

Martin said the company was interested in adding more “bolt-on” deals to its existing business in its core markets of the United States, Britain, Canada and Sweden.

Wolseley added five acquisitions in the last quarter, including businesses in the United States, Britain and Taiwan, for a total sum of 119 million pounds.

“We would expect now to invest now at least another 100 million pounds this quarter and possibly a little bit more. The pipeline is looking a bit more healthy,” said Martin.

Shares in Wolseley were up 2.4 percent at 3391 pence by 0956 GMT, making it the highest riser on the FTSE 100 index.

“Wolseley is continuing to improve its operations and control costs as well as improve its market position through self help and acquisitions,” said Whitman Howard analyst Stephen Rawlinson. “We are therefore positive, but more patience may be needed,” he added.

$1 = 0.5968 British Pounds Reporting by Li-mei Hoang; Editing by Paul Sandle and Pravin Char

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