Wolseley takes a knock from UK boiler price war

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The heating market declined around 1% in the six months to January 31 because the first government-backed Energy Companies Obligation programme — aiming to make homes more efficient — ended.

Wolseley said that “very competitive pricing” for boilers had had an impact on gross margins.

Meakins added: “If you go back a year, there was a lot of activity going into the market because of ECO… there were a lot of low-margin boilers going around at that stage. There has been a bit of a hangover from that — both we and boiler manufacturers are pretty competitive at the moment.”

 

Wolseley’s UK business only accounts for around 10% of group trading profits, which rose 11% to £390 million over the half thanks to record margins in the US, where all its businesses outperformed.

Meakins said the US operation — accounting for more than three-quarters of trading profits — saw its third successive quarter of double-digit sales growth and was well-placed despite the looming prospect of the US Federal Reserve raising interest rates later this year.

First-half revenues were up almost 8% to £6.4 billion but pre-tax profits slumped two-thirds to £103 million.

That was thanks to a £245 million writedown on Scandinavian materials firm DT Group — which it bought in 2006 — because of “continued challenging market conditions in the region and reduced expectations of future profitability”.

Source Article from http://www.standard.co.uk/business/business-news/wolseley-takes-a-knock-from-uk-boiler-price-war-10130545.html

March 24, 2015 |
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