Wolseley’s share price rose 59.5p, or 6%, on Monday after it posted a confident trading update for the first half of its financial year.
Shares hit 1047.5p when the buildings material company said that it had achieved a “strong increase in sales and profits” in the UK and North America, for the five months to 31 December.
Wolseley said that despite a flat construction market in continental Europe, group sales were up 10% and profit was 25% higher than the same period in 2003.
In the UK, Wolseley’s growth was driven by the repairs, maintenance and improvement sector. Finance director Steve Webster said he expected this trend to continue in the second half.
Webster was upbeat about prospects in the commercial sector in the UK and the USA, but conceded that the UK’s market was still depressed. “The commercial market is a bit better in the USA, but it is very important that the governments in North America and the UK spend what they have promised,” he said.
He was adamant that the UK housing market was set for a soft landing, but said the industrial market was still suffering from the downturn in the British manufacturing sector, which is officially in recession.
Governments in North America and the UK must spend what they’ve promised
Steve Webster, Wolseley
Wolseley’s UK business recorded double-digit sales and trading profit growth in the period, but warned that higher pension and restructuring costs would hit trading margins in the second half of the year.
Growth was strongest in the group’s US businesses, largely because the US economy was doing well and Wolseley had a smaller market share and therefore a greater potential for growth.
Building materials sales were up more than 20% in the USA, and profits increased more than 30%.
Rises in the price of materials including copper, steel and plastics accounted for about $10m (£5.3m) of the increase in trading profit in its US plumbing and heating distribution business.