Where will this lead to?

glad it's with your money

just checked .... trading update is due on Monday

Wolseley Trading Statement





TIDMWOS

RNS Number : 2062M
Wolseley PLC
26 January 2009

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NEWS RELEASE
26 January 2009




Wolseley plc
Pre Close Period Trading Statement for the five months ended
31 December 2008




Wolseley plc, the world's largest specialist trade distributor of plumbing and
heating products to professional contractors and a leading supplier of building
materials, today issues its regular trading statement for the five months ended
31 December 2008, prior to entering its close period. The half year results for
the six months ending 31 January 2009 are due to be announced on 23 March 2009.


Summary for five months ended 31 December 2008:


Overview
Further deterioration in Wolseley's general trading environment in November
and December due to unprecedented events in the global financial markets and
negative GDP trends.
Management's emphasis continues to be concentrated on actions to enhance
cash generation and reduce costs, with benefits coming through as planned.
Recent adverse movement in foreign exchange rates have negatively affected
the Group's overall net debt position. However, the Group's projections continue
to show covenant compliance at 31 January 2009.

Operating Highlights
Revenue up c.3%, down c.10% in constant currency.
Trading profit down c.45%, c.52% in constant currency.
Profit before tax, exceptional items and amortisation and impairment of
acquired intangibles down c.66%, c.75% in constant currency.
Net debt increased by 22% since 31 July 2008 to GBP3 billion principally
due to GBP557 million adverse effect of currency exchange. However, net debt is
expected to be lower at 31 January 2009 due to an expected working capital
inflow, but will be dependent on exchange rates at that date.
Excluding the effects of currency translation, the improvement in working
capital cash to cash days at 31 December 2008 compared to FY 2008 is in line
with the 10% improvement target for FY 2009.

Debt Reduction and Restructuring Actions
Previously announced actions to date initiated in the five months to 31
December 2008 have resulted in headcount reductions of 7,500, combined
exceptional restructuring charges of GBP208 million, and annualised cost savings
of GBP237 million.
Recent actions in the period to 31 December 2008 have resulted in
additional exceptional restructuring charges of around GBP39 million and
annualised savings of around GBP93 million.
Actions have been taken to mitigate the risk of further adverse effects on
net debt caused by the weakening of sterling against the euro.
An additional receivables funding arrangement in UK was implemented in the
period, which reduced net debt by GBP72 million.


Outlook
The Group expects macro economic conditions to deteriorate in the short
term, and until conditions stabilise Wolseley is unlikely to see any upturn in
its markets.
Until consumer confidence returns and availability of finance for customer
projects improves, the Group expects performance in North America to decline.
The Group also expects conditions in the UK to continue to deteriorate with
performance in Continental Europe also likely to remain under pressure as
consumer sentiment is further negatively affected by macro economic conditions.
Against the background of deteriorating trading conditions and volatile
financial markets, the Group will continue to concentrate its near term
operational actions on enhanced cash generation and cost reduction.
The Group will continue to evaluate all of the options and implement the
actions necessary to position the balance sheet appropriately for the medium
term.
The next few months will be critical in providing further evidence to
assess how the downturn may evolve.
The Group's objective is to position itself to be able to continue to
operate competitively, and maintain a level of investment over the medium term
that will ensure the business is well positioned to benefit when the economies
in which it operates stabilise and markets begin to recover.



Chip Hornsby, Chief Executive of Wolseley, said:


"We continue to act decisively and rapidly in response to the unprecedented
market conditions we face. Our attention and efforts remain resolutely focussed
on achieving compliance with our banking covenants, without losing sight that to
generate shareholder value we must seek to ensure the business is well
positioned to benefit when the markets in which we operate begin to recover. In
the meantime, and against this background of declining macro economic activity
we continue to implement the actions required to reduce cost and maximise
cash."
Overview


For the five months ended 31 December 2008, Wolseley continued to be affected by
the increased slowdown in most of the Group's markets.


Group revenue for the five months ended 31 December 2008 was up around 3%
compared to the corresponding period in the prior year. Trading profit was down
by around 45% primarily due to lower profitability in Stock Building Supply, DT
Group and Wolseley UK. In constant currency, revenue would have been around 10%
lower and trading profit 52% lower than the corresponding period in the prior
year.


Our objective remains to ensure the appropriate sizing of the cost base in line
with the deteriorating market environment, to drive strong cash flow and reduce
net debt. In particular, the Group has taken further action to mitigate the
adverse effects on the Group's overall debt position of the weakening of
sterling against the euro. The principal actions in the five months to 31
December 2008 are set out below:


1. Restructuring actions


Previously announced actions to date in the five months to 31 December 2008 have
resulted in headcount reductions of 7,500 combined exceptional restructuring
charges of GBP208 million in FY 2009, and annualised savings of GBP237 million.

Recent actions in the period to 31 December 2008 have resulted in additional
exceptional restructuring charges of around GBP39 million and annualised savings
of around GBP93 million.


2. Net debt and cashflow


Net debt increased by 22% since 31 July 2008 to GBP3 billion principally due to
GBP557 million adverse effect of currency exchange. Gearing was higher at 78.0%
compared with 73.5% at 31 July 2008. The Group has committed and undrawn banking
facilities available of over GBP1 billion as at 31 December 2008 and has no need
for additional facilities until after the year ended 31 July 2011.


In December, Wolseley UK entered into a receivables funding arrangement which
reduced net debt at 31 December by GBP72 million. The additional cost of
servicing this arrangement is expected to be around GBP4 million a year.


Given Wolseley's geographical diversity of operations between North America, the
UK and Continental Europe, the overall level of net debt is sensitive to
movements in exchange rates. At 31 December 2008, 14% of net debt was
denominated in dollars, 48% in euros and 38% in sterling. Since November,
sterling has weakened against the dollar and the euro and consequently the Group
has taken the following risk mitigation actions:


* The Group has recently entered into zero cost collar transactions with a total
value of just over EUR1.7 billion. These hedging transactions protect the Group
giving it an option to buy euros at a protective floor limit should sterling
weaken beyond this point. Of the EUR1.7 billion total, EUR800 million was hedged at
EUR1.05 and EUR900 million at EUR1.02.

* A further transaction to convert GBP200 million of euro denominated debt to
sterling was completed prior to 31 December 2008. This brings the cumulative
total of foreign currency debt converted to sterling since 31 July to
GBP300 million of US dollar denominated debt and GBP700 million of euro
denominated debt. The weakness of sterling has had a favourable translation
effect on trading profit of GBP40 million in the period.



Due principally to the unprecedented movement in currency exchange rates in the
last three months, the Group's covenant headroom at 31 January 2009 is likely to
be lower than we expected at the time of our interim management statement. The
final net debt position at that date should be lower than at 31 December 2008
due to an expected working capital inflow, although it will be dependent on
foreign exchange rates at 31 January 2009. The Group's projections continue to
show compliance with our banking covenants at 31 January 2009.


Excluding the effects of currency translation, the improvement in working
capital cash to cash days at 31 December 2008 compared to FY 2008 is in line
with the 10% improvement target for FY 2009. Operating cash flow for the five
months ended 31 December was down on the equivalent period in the prior
year primarily as a result of a lower level of trading profit and the cash cost
of restructuring actions.

Capital expenditure in the five months was lower than the corresponding period
last year, and is in line with a targeted spend of around GBP180 million for the
full year (FY 2008: GBP317 million).


Further details of market conditions and financial performance in each of the
Group's businesses are set out below:


North America
In North America, revenue in the five months ended 31 December 2008 in sterling,
was up 6% compared to the corresponding period in the prior year. Trading profit
was down by around 16% reflecting the loss reported by Stock in the period. In
constant currency, revenue and trading profit would have been around 11% and 30%
lower than the corresponding period in the prior year.


The Group's US results have continued to be affected by the ongoing decline in
US housing starts and falling consumer confidence.


Encouragingly, Ferguson continued to outperform the overall market in the period
despite encountering increasingly challenging new residential and RMI markets.
However, revenue in US dollars for the five months ended 31 December 2008 was
down 10% and underlying trading profit excluding property profits was down
around 13%. During the five months to 31 December 2008 Ferguson benefited from
the stability of the commercial and industrial market, although during December
there were signs of certain segments of the market weakening due to continued
scarcity of finance for projects.
Stock's revenue and trading profit in US dollars have been impacted by the
continuing slowdown in the new residential market. Annualised housing starts for
December have now fallen to 550,000 units, a fall of 45% on the equivalent
period in the prior year. Lumber prices also continue to decline to
unprecedented levels and recently fell below $200. Stock's revenue was down by
around 23% and the trading loss for the five months ended 31 December 2008 was
around $110 million (2007: loss of around $50 million). The restructuring
actions announced on 23 October 2008 have now been completed apart from two
locations which will be closed in the next few weeks.
Despite slowing markets, the Canadian business has achieved an increase in
organic sales growth of around 4% in the five months to 31 December 2008. Local
currency trading profit was slightly down due to a lower gross margin.
Europe
Revenue in sterling for Europe was broadly flat in the five months ended 31
December 2008, whilst trading profit was down by around 60% mainly as a result
of the lower level of activity in all regions. In constant currency, revenue
and trading profit would have been around 10% and 65% lower than the
corresponding period in the prior year.


Revenue for the UK and Ireland decreased by about 12% with trading profit down
by around 80%. As anticipated there has been a further deterioration in the UK
market activity in recent weeks. The previously announced restructuring actions
are well under way and are on track to deliver annualised benefits of GBP80
million and a headcount reduction of 2,000 in the UK.


Macro economic conditions in France continued to weaken which has adversely
affected consumer sentiment. Reported revenue in euros for the five months
ended 31 December 2008 was around 4% lower with trading profit down by over 60%.
The January profit is expected to show a more favourable trend as the effect of
the phasing of accounting estimates, referred to in the IMS in November 2008 of
EUR8 million, reverses in the month.


For the five months ended 31 December 2008, DT Group reported revenue, in local
currency down around 13% with trading profit down around 40%. The markets for
building materials continued to deteriorate in all four Nordic countries during
November and December.


Revenue in Central and Eastern Europe, in local currency was flat with trading
profit down around 85%. This was primarily as a result of competitive pressure
on margins, and an additional impairment of GBP2 million in respect of the
deferral, announced in September, of an IT project.


Outlook


The Group expects macro economic conditions to deteriorate in the short term,
and until conditions stabilise Wolseley is unlikely to see any upturn in its
markets. Until consumer confidence returns and availability of finance for
customer projects improves, the Group expects performance in North America to
decline. The Group also expects conditions in the UK to continue to deteriorate
with performance in Continental Europe also likely to remain under pressure as
consumer sentiment is further negatively affected by macro economic conditions.
Against the background of deteriorating trading conditions and volatile
financial markets, the Group will continue to concentrate its near term
operational actions on enhanced cash generation and cost reduction.


The Group will continue to evaluate all of the options and implement the actions
necessary to position the balance sheet appropriately for the medium term. The
next few months will be critical in providing further evidence to assess how the
downturn may evolve. The Group's objective is to position itself to be able to
continue to operate competitively, and maintain a level of investment over the
medium term that will ensure the business is well positioned to benefit when the
economies in which it operates stabilise and markets begin to recover.




There will be an analyst and investor meeting at 0930 (UK time) today at UBS, 1
Finsbury Avenue, London, EC2M 2PP. The meeting can also be accessed by
conference call:


+------------------------------------+------------------------------------+
| UK dial-in number: | +44 (0)20 7138 0835 |
+------------------------------------+------------------------------------+
| US dial-in number: | +1 718 354 1172 |
| | |
+------------------------------------+------------------------------------+
Slides relating to the call will be available on www.wolseley.com.
The call will be recorded and available on www.wolseley.com after the event

falco .... sure hope you don't go long .... for myself, i sold out too early, but it was a decent profit so should not complain

No didn't bother thankfully,too many knife scars on my hands as it is !

by friday, it was too dangerous to call either way

in fact, you may want to consider a short on WPP ..... i am amazed by that stock's current resilience as advertising is the first port of call to save costs .... further, a large slice of WPP's revenue is generated by US car makers, and we all know where they are heading!

Currently 181.7 and in auction.

This is a disastrous trading statement...WOS will go below 100p. No doubt about that.

Wolseley reveals big profits slump - MoneyAM


Plumbing supplies group Wolseley has announced a 45% drop in trading profit.

In its trading statement for the five months to 31 December, Wolseley highlighted further deterioration in its trading environment in November and December 'due to unprecedented events in the global financial markets and negative GDP trends'.

Revenue is up 3% but down 10% in constant currency terms. Trading profit is down 45%, 52% in constant currency.

Profit before tax, exceptional items and amortisation and impairment of acquired intangibles is down 66%, or 75% in constant currency.

Net debt increased by 22% since 31 July 2008 to 3 billion principally due to a 557 million effect of currency exchange. Wolseley says net debt is expected to be lower at 31 January due to an expected working capital inflow 'but will be dependent on exchange rates at that date'.

The group says it expects macro-economic conditions to deteriorate in the short term and is unlikely to see any upturn in its markets until conditions stabilise.

Chief executive Chip Hornsby said 'Our attention and efforts remain resolutely focused on achieving compliance with our banking covenants, without losing sight that to generate shareholder value we must seek to ensure the business is well positioned to benefit when the markets in which we operate begin to recover.

'In the meantime, and against this background of declining macro-economic activity, we continue to implement the actions required to reduce cost and maximise cash.'

sp continues to rumble south ..... i have looked back at the charts for 10 years and as far as i can see, once 300 was broken, sp was in totally uncharted waters .... i very much doubt that WOS will fold, but i have no idea at what level support will be found

Yes it doesn't look good - currently in auction - I closed my short last week - but I'm seriously thinking of opening a new one.

i too re-shorted on 27/1 and then doubled that up on 29/1

I'm also short on WOS, in unchartered water at the moment but with the value of Sterling slipping further and further the companies debt is expanding adding to the other forces. If 150 is taken out quickly then will hold for 125, I think 25 point increments are probally wise, anyone else got feelings on stop loss etc.?

where have you been for the last few days!?
now appreciably stronger than it was a week ago against both and $

Indeed but I don't see this lasting, I think we'll soon be seeing it go the other way.

Cynic - I think the pound is down @2.5% against the dollar over the past week?

perhaps my timescale is wrong, but was certainly down to about $1.35 (now $1.41) and 1.03 (now 1.11) within the very very recent past

on the basis that there may be quite a sharp bounce, i decided to bank what finished as a pretty modest profit, but a profit nevertheless

bears have been giving WOS a real pasting over the last few days, but the chickens have come home to roost (very Cantona!)