Profits rocket 35% at gloomy Wolseley

Wolseley, the world's largest builders' merchant with 1,100 outlets in the US and Europe, continued its run of profits growth in the six months to January, but warned on the trading outlook and saw its shares close 7p lower at 341p.

Jeremy Lancaster, chairman and managing director, said: "The immediate outlook for British distribution businesses remains uninspiring with a depressed housing market and no evidence yet of the `feel-good factor' returning among consumers."

Boom conditions in the US, which accounted for more than half group sales, were beginning to subside as housing starts slipped from their recent peak and consumer spending in France was expected to be delayed because of political uncertainty.

Despite Mr Lancaster's gloomy prognosis, profits continued their relentless increase since the company emerged early from the recession. Pre-tax profits jumped 35 per cent to £117.3m from £87m after a 21 per cent rise in sales to £1.87bn.

Wolseley made higher profits in the six-month period than in 1991 and 1992 combined, and only £4m less than in 1993.

The dividend jumped 25 per cent to 2.95p, although the company warned the rise was partly to rebalance the ratio between interim and full-year payouts.