Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on WOLSELEY PLC. We currently have 9 research reports from 2 professional analysts.
|31Jan17 14:42||RNS||Total Voting Rights|
|30Dec16 12:30||RNS||Total Voting Rights|
|30Dec16 12:25||RNS||Block listing Interim Review|
|13Dec16 17:10||RNS||Director/PDMR Shareholding|
|06Dec16 07:00||RNS||Q1 Interim Management Statement|
|30Nov16 15:45||RNS||Total Voting Rights|
|29Nov16 16:20||RNS||Result of AGM|
Frequency of research reports
Research reports on
The core segment (US) remains strong; other regions struggle to cope
31 Jan 17
Wolseley reported Q1 FY16/17 results in line with our estimates as well as market consensus (organic revenue growth slightly missed but the trading profit was in line). The lfl revenue increased by +1.8% (vs Q4 FY15/16: +1.5%, Q3 FY15/16: +2.8%; our estimate: +2.3%), once again driven by strong consumer demand in the US residential and commercial markets (c.50% of group revenue). However, ongoing weakness in the US industrial business (c.12% of group revenue) and commodity price deflation (-2.4% yoy) capped the region’s organic growth at 4.2% (vs Q4 FY15/16: +3.1%, Q3 FY15/16: +5.0%; our estimate: +4.5%; c.68% of group revenue). In the UK, uncertain macro-economic conditions and a sluggish heating market once again pinned down organic growth (-2.9% vs Q4 FY15/16: -2.1%, Q3 FY15/16: -0.4%; our estimate: -2.0%; c.11% of group revenue). The Nordic region also continued to sail in the red zone (Q1 FY16/17: -2.9%, Q4 FY15/16: -2.3%, Q3 FY15/16: -2.6%; our estimate: -3.0%; c.13% of group revenue), on the back of the construction market slowdown, particularly in Denmark (c.45% of the regional revenue). Moreover, Canada & Central Europe witnessed a 2.7% decline on an organic basis (vs Q4 FY15/16: +0.3%, Q3 FY15/16: flat; our estimate: flat; c.8% of group revenue), largely due to weak industrial demand from Alberta and Switzerland. Total reported revenue increased by 22.9% (vs Q4 FY15/16: 11.4%, Q3 FY15/16: +10.8%; our estimate: +9.8%), on the back of FX tailwinds (+17.7% yoy; weaker GBP vs USD and EUR) and positive scope impact (+3.4%). THe gross margin improved by 30bp during the quarter due to a better price mix and improved negotiations with vendors). However, the trading profit margin declined by 10bp due to higher operating costs in the US (+10.9% yoy). The company completed five bolt-on acquisitions for £216m (EV/sales: 1.5x, EV/trading profit: 9.4x) and expects the full-year investment to be in the range £300-400m.
07 Dec 16
"The US bull continues to drive international equity sentiment. And the sell-off in global bond markets probably still has further to go, with investors now awaiting details of Trump’s fiscal expansion which, assuming it is just half as rigorous as suggested during his presidential campaign, will power US growth potentially enough to take the 10-year yield back to 3% or more by this time next year - a level last seen back at the start of 2014. The fact that UK Prime Minister, Theresa May, was seemingly forced yesterday to accept Labour’s demands that she sets out her ultra-sensitive Brexit plans to Parliament, while the resignation of Italian leader, Matteo Renzi, a couple of days ago appears to signal the wave of populism has now landed in the heart of the EU with New Year elections in France and Germany potentially threatening the very foundation of the Euro, quite staggeringly appears to be passing by unnoticed. Indeed, the FTSEMib on Tuesday managed to post its best levels since the Brexit vote in June, with bad-debt laden Italian banks put in the strongest performances. Financials also powered the Dow Jones to yet another record high last night, with strong technology stocks boosting the NASDAQ sufficiently for it to record the best performance amongst the principal US indices. Asia followed suit, with the Nikkei performing strongly as the Yen weakened against the US$, although the ASX enjoyed the biggest upward move amongst the regional indices despite official data confirming the Australian economy contracted during the third quarter, its first fall in five years, apparently due to a reluctance by businesses to invest. Today, the UK is due to provide Industrial Production figures along with release of the Halifax House Price Index and NIESR monthly GDP estimates, while consumer credit data is due from the US. UK corporates expected to detail earnings or trading updates include Autins Group (AUTG.L), Carillion (CLLN.L), Kromek Group (KMK.L), Numis (NUM.L) and Stagecoach (SGC.L). Meanwhile, traders will be keeping an eye out for further media reports regarding tomorrow’s policy-setting ECB meeting, which is now expected to extend its bond-purchase programme but just might signal a time by which tapering could get underway. London is expected to take its lead from the US in today’s opening trade, with the FTSE-100 seen rising some 40 points. " - Barry Gibb, Research Analyst
Europe remains weak; onus again on the US
11 Nov 16
Wolseley reported FY16 results (year ending 31 July) slightly ahead of our estimates. Despite commodity price deflation (-1.5% impact on the top-line) and weak industrial business in the US (-10% lfl yoy, 12% of US revenue), the company’s lfl revenue was up 2.4% (vs our estimate: 2.5%). Strong consumer demand in the US residential and commercial markets (jointly contributing c.73% of the US revenue) safeguarded 4.1% organic growth in the region (vs our estimate: 4.3%; c.66% of group revenue). In the UK (c.14% of group revenue), sluggish RMI activity/competitive heating market resulted in a 1.6% organic revenue decline ( Q4: -2.1% vs our estimate of -1.3%; Q3: -0.4%) The Nordic region, contributing c.13% to group revenue, clocked 0.6% lfl growth (vs our estimate: 0.8%) during the year. However, the negative momentum sequentially continued in the fourth quarter (Q4: -2.3%, Q3: -2.6%; Q2 16: +2.4%, Q1 16: +5.5%) due to challenging macro-economic conditions, especially in Denmark and Finland. Reported revenue increased by 8.5% (vs our estimate: 6.5%) on the back of FX tailwinds (+4.3%; largely due to the depreciation of the GBP vs the USD) and a positive scope effect (+1.8% yoy). Despite a better gross margin (+30bp yoy; a better mix of higher value-add products/services and improving purchasing terms), the trading margin remained flat at 6.4% (+30bp vs our estimate) due to continued investment in estate, technology and brand building. As expected, management announced a UK turnaround plan with a target of £25-30m in annual savings over the next three years (80 branches and one distribution centre will be closed, resulting in c.800 job losses). Also, a review of the operating strategy in the Nordics has been initiated. The company completed 16 bolt-on acquisitions for £113m during the year (EV/sales multiple: 0.6x) and plans to invest a further £300m in FY2017. A final dividend of 66.7p was also announced by management, bringing the total to 100.0p per share (+10.2% yoy).
28 Sep 16
"How to solve the dilemma of ultra-low interest rates? The question was being posed again yesterday by members of both the ECB and the Fed. The Governor of the Central Bank of Ireland, Philip Lane, went as far as calling for a ‘forceful pursuit of stimulus’ in order to return interest rates to more normal levels, while Vice Chairman, Stanley Fisher, added that the economy is better off when there is ‘a price for using money’. They are simply reflecting the common desire to stimulate inflation to return interest rates and growth trajectories back to more historical trend - not that they have any chance of forming a consensus on how to do it, nor appear to embrace the reality that the dramatic changes to world order being created through the drive into new technologies means the old ways of doing things and predictable economics have probably gone forever. One hope the markets had had was that the Saudi-Russia proposal to cap oil production might succeed, but Iran’s stated determination to ramp-up production until it hits 4.2m bbl/day appears to have blown apart any idea of OPEC reasserting a binding quota system before its meeting in Algiers closes today, leaving oil traders to shift their focus to the Organisation’s next scheduled meeting in November instead. US equity markets, however, looked beyond these concerns to focus on positives from technology and consumer stocks, as well as some modest recovery in the over-sold banking sector, leaving all principal indices to close quite firmly up led from the start by the NASDAQ. Asia by contrast was marked down across the board, with the Nikkei in particular hurt by weaker oil prices, while banking sector jitters also reached its shores and sentiment toward export-related shares continued to be knocked by Yen strength. This mixed picture leaves London and Europe in an undecided mood for this morning’s opening, with the FTSE-100 seen opening around 10 points higher. No major UK macro data is due for release this morning, although traders will be listening out for closing statements from OPEC’s 2-day meeting, a press statement due from ECB President, Mario Draghi and a speech from the IMF’s Christine Lagarde. Later this afternoon, Fed Chair, Janet Yellen, is due to make her Testimony, while member Kashkari is also scheduled to make a statement. Corporates due to release earnings reports include Moss Bros (MOSB.L), Sainsbury (SBRY.L) and Smiths Group (SMIN.L), while today SAB Miller (SAB.L) shareholders are due to vote on their proposed merger with Anheuser Busch InBev." - Barry Gibb, Research Analyst
Performance meets estimates; patchy start for Q4
03 Jun 16
Wolseley reported Q3 FY16 numbers broadly in line with our estimates after our last report on 1 June. The lfl revenue growth was up 2.8% (our estimate: +2.8%), driven by robust growth in the US (lfl: +5% vs our estimate: +4.5%; c.80% of trading profit) but once again knocked down by commodity deflation (-1.4% impact on the group’s lfl revenue growth), weak industrial business in North America (now accounts for 13% of US revenue vs 15% in 2015) and sluggish RMI activity in the UK (lfl: -0.4%, although better than our estimate of -2%; c.8% or trading profit). In the Nordic region, sluggish construction and DIY activity and the tax break reduction in Sweden led to a 2.6% decline in organic revenue growth (vs Q2 16: +2.4%, Q1 16: +5.5%; our estimate: +3.5%). Furthermore, the lfl growth was flat in Canada (+0.1% vs our estimate: -1.5%; growth in Blended branches and waterworks was offset by weak industrial business) and Central Europe (-0.2% vs our estimate: -4%; challenging conditions in Finland eroded the growth from Denmark and Sweden). The reported revenue was up 10.8%, underpinned by new acquisitions and favourable currency movements (contributing +1.7% and +4.8% to the group’s revenue). The gross and trading margin improved by 40bp and 30bp on a yoy basis (at 28.4% and 6.4%; 30bp ahead of our estimates), once again driven by the ongoing work on pricing compliance and moving the business mix towards higher margin channels. The review of the UK operating model is expected to be complete by August 2016. Wolseley completed five bolt-on acquisitions during the quarter with annualised revenue of c.£23m. Management reported lfl revenue growth of 1% (much lower than the consensus estimate of 2.5-3%) in the weeks since the third quarter ended 30 April 2016, triggering c.6% decline in the stock price on 1 June 2016. However, the company still expects the trading profit outlook for the full year to be in line with analysts’ expectations of c.£920m at CER.
02 Jun 16
London equities are expected to open marginally higher with limited trading interest at the opening, as traders nervously await news from today's ECB rate decision, a speech from Mario Draghi and OPEC meeting. Caution following yesterday's Fed Beige Book remark that 'Tight Labor Markets' were pushing up wages, left US stocks to drift positive overnight on low volumes led by consumer staples and healthcare shares. Asia by comparison was mostly down, with Japan's Nikkei sharply lower, effectively dragging Chinese and Australian blue chips behind it, as the Yen gained late yesterday following Prime Minister Shinzo Abe's decision to defer next year's scheduled national sales tax hike until October 2019, together with a BoJ member's warning on the impact on negative interest rates. In Europe, the European Central Bank policy meeting is expected to leave its EUR1.8 trillion stimulus package unchanged while raising its inflation projection for the first time in a year in response to higher oil and commodity prices. Important data releases today also include Eurozone producer prices this morning, followed by US initial jobless claims and a speech by Fed's Evans this afternoon. Results are expected from Johnson Matthey.
Emerging from the clouds
16 Feb 17
Rolls-Royce’s underlying performance in FY16 was ahead of both its own and market expectations. Media focus on the non-cash £4.4bn headline FX loss is missing what looks to be the basis for optimism. As the civil model starts to move from investment in engines for the A350 and A330neo into the aftermarket delivery phase over the remainder of the decade, we think cash flow is likely to improve, particularly if supported by an eventual recovery in Marine.
15 Feb 17
At the current market capitalisation of £29m, we believe the shares are significantly undervalued. We estimate that the highly profitable Maritime business is alone worth at least £40m. With net cash of £9m at end-2016, this implies that the market is currently ascribing a combined negative value of £17m to the rest of the group, which together account for c.54% of group revenues. This is very harsh given the management actions to transform TP Group to a profit-driven Tier 2 specialist services and engineering company are bearing fruits across the divisions. TPG Managed Solutions is expected to more than double its profits in 2017, while TPG Engineering and Design & Technology are on course to deliver sustainable profits from 2019. Even if we ascribe zero value to Engineering, Design & Technology and Managed Solutions, the shares are worth 9.5p a share, a 38% upside from the current share price. BUY.
Taking the bull by the horns
15 Feb 17
Avon Rubber announced this morning that CEO Rob Rennie has left and been replaced with Paul McDonald, formerly managing director of Avon’s Dairy division. This news comes as a surprise and is likely to raise some questions over the CEO and CFO transition, with the CEO only being in post for just over a year. However, the group has appointed an executive already known to many who have followed the business, and as such should be seen as a good appointment with a track record of decisiveness and getting things done.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Share & share alike
14 Feb 17
The rally in the last fortnight, highlighted in the table, reflects a continued flow of positive updates and economic news. The FTSE 250, Small cap and Fledgling indices have reached record highs. We are in the lull ahead of results for those companies with a December year end, a welter of economic data regarding the UK economy, the State of the Union address in the US on 28 February and the UK Budget on Wednesday 8 March. We will learn at that stage the latest forecasts from the Office of Budget Responsibility. As highlighted previously, the reaction to corporate updates will continue to set the tone.