Exhibit 1.8
24 July 2002
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NEWS RELEASE
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WOLSELEY plc
Trading update for the year ending
31 July 2002
As part of its normal investor relations activities, Wolseley is issuing its
regular trading statement prior to entering the close period. The preliminary
results for the 12 months ending 31 July are due to be announced on 24 September
2002.
Summary
Trading conditions in the group's principal markets over the last four months
have been broadly in line with comments made in our interim announcement on 19
March 2002. No significant change in trading patterns is expected prior to 31
July. Compared to last year, sales (including acquisitions) for the eleven
months ended 30 June 2002 for the Group's continuing operations are 12.7% up,
with the EBIT margin percentage for the same period maintained.
Operations
The underlying trends in the UK market remain positive and additional benefits
should arise from the increases in public sector spending, recently announced by
the UK Government. Markets in Continental Europe remain subdued but recent
progress by the group's businesses in France and, in particular, Austria, is
more encouraging.
The picture in the USA continues to vary both geographically and by market
sector. The industrial and commercial sector remains the weakest segment, but
the overall level of US housing continues to be resilient at an annual run rate
of over 1.6 million starts. Activity levels in the group's US plumbing and
heating business have recently shown more encouraging signs and a strong finish
to the financial year is expected. The integration of Westburne's US business
with Wolseley's other US plumbing operations is on schedule. In the US building
materials business, whilst average lumber prices for the eleven months to 30
June are close to the comparable prior year average, current lumber prices are
below where they were a year ago. However, this factor only directly affects
about 10% of group sales. Previous weakness in certain regional housing markets
remains apparent, resulting in continuing pressure on margins. Accordingly, the
US building materials business is unlikely this year, to match the level of
trading profit reported in the previous financial year.
The Canadian market is holding up well and the contribution from Westburne's
Canadian operations is expected to be in excess of the group's expectations at
the time of acquisition in July of last year.
The group's principal businesses continue to grow market share, benefiting from
increasing economies of scale, superior service to customers and continued
investment in logistics. Recent approval has been given by the Wolseley board
for a new distribution centre to be located in the North West part of the USA,
to replace the smaller distribution centres in Portland and Salt Lake City. The
new facility is expected to be operational in early 2004. This approval
demonstrates the board's confidence in the prospects for the group's US plumbing
supplies business and the clear benefits being obtained from the existing
distribution centre network in the USA.
Financial
The group's cash flow and financial position remains strong. Group gearing, as
at 31 July 2002, is expected to be around 40% at current exchange rates,
including the effect of the consideration for acquisitions in the financial year
to date amounting to approximately (pound)163 million. Interest cover for the
year to 31 July 2002 is expected to be over fifteen times.
Outlook
The Wolseley board remains optimistic as to the group's immediate trading
prospects. It is confident that the group's strong financial position, strategy
for organic and acquisitive growth and conservative accounting policies, will
continue to stand the group in good stead over the long term.
Enquiries:
Wolseley plc
Tel: + 44 (0)118 929 8700
Steve Webster, Group Finance Director
Jacqueline Sinclair-Brown, Director of Corporate
Communications
Brunswick Group
Tel: + 44 (0) 20 7404 5959
Andrew Fenwick
Sophie Fitton
An interview with Steve Webster, Group Finance Director in video/audio and text
will be available post RNS statement, from 0700 (BST) on www.cantos.com and
www.wolseley.com.
There will be UK analyst meetings today at UBS Warburg offices, Finsbury Square,
EC2