Wolseley profits back on the boil

Bricks and mortar combine to make good news for the building and heating materials group, which shed £328m last year following the impact of the recession on the housing market. Revenues have risen 3% to £13.6bn, and it reckons a focus on improving its ‘customer, product and vendor mix’ has paid off.

As to how long that’ll last, who knows? Wolsely said markets were broadly stable but there had been ‘no strong rebound in activity’ following the downturn, adding that it remained cautious about its cost base. No surprise then that the company has been busy selling off bits of its business over the past 18 months. In July, it sold its French distribution division Brossette and British Build Center business to France's Saint-Gobain for £310m.

Which as a policy seems very sensible, especially when you learn that the number of house sales each month is still little more than half the level of the boom years. Britain's construction sector slowed to ‘near stagnation’ last month according to Markit’s influential Purchasing Managers’ Index, as the crisis in the eurozone intensified, consumer confidence lagged, and everyone starts strapping on the ol’ tin hat ready for another recession.

Markit reckons only a backlog of work from previous months has prevented the sector slipping into decline this time round too. Not only is the housing market persistently weak, but cutbacks in government-funded projects like public buildings, schools and hospitals suggest the hod-wielders may be on the defensive again soon. Hopefully Wolesley's restructuring will enable it to ride any recession in finer form...