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Wolseley seeks Swiss headquarters

BY HBSDEALER Staff

Wolseley, the parent company of U.S. plumbing distributor Ferguson, has announced plans to move its official headquarters to Switzerland in order to reduce its tax burden in England. If approved by shareholders, the London-based firm would create a holding company called “New Wolseley” but continue to employ nearly 10,000 people in the U.K.

New Wolseley would still be listed and traded on the London Stock Exchange, according to the proposal.

Based on earnings in the last financial year, the move would save the company about 23 million pounds (US$36 million), company executives said in a conference call.

In tandem with the Sept. 27 announcement, Wolseley released its financial earnings for fiscal 2010. The global supplier of building materials narrowed its losses to 340 million pounds (US $538 million), compared with 1.17 billion pounds (US $1.85 billion) for fiscal 2009. Revenues were reported at 13.2 billion pounds (US$20.8 billion) for fiscal 2010, which ended July 31, 2010, a 9% drop from revenues of 14.4 billion pounds (US$22.7 billion) a year ago.

According to Wolseley’s financial statement, it retains a 44% interest in Stock Building Supply, which it sold to the Gores Group in 2009. “The [company’s] share of the after-tax losses of the business in [fiscal 2010] amounted to 13 million pounds (US$20.5 million),” Wolseley said. “In light of the level of ongoing losses generated by the business, the group has concluded that its investment is impaired and has written off the carrying value of 41 million pounds. The group has no requirement to fund any investment in the future.”

As for Ferguson, one of the largest distributors of plumbing and HVAC equipment in the United States, revenue was down by 11%, the company said. Reported earning were 239 million pounds (US$377 million), down 70 million pounds (US$110.6 million).

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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

A price index of lumber and panels used in actual construction for Sept. 28, 2012

*Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.

Lumber: SPF lumber prices weakened further in response to producers trying to sell volumes with greater urgency and limited demand from buyers. Inquiries fielded by producers were limited in volume and often highly specified and mixed. Southern Pine lumber volumes available for quick shipment were priced to sell, as September closed and producers looked to invoice as much volume as possible. Mills listened to counters. Coastal species lumber mills were again forced to enter the market with sizable volumes to sell, placing downward pressure on prices. Buyers, trying to hedge against lower prices in the near future, countered deeply. Mills accepted the deepest counters to move floor stocks. The Inland species lumber market remained weak, but the volume of discounted sales slowed as mills cleaned up excesses. The flow of material through the system remained good, and distributers and reloads reported good sales and shipments to their customers. The highlight for Eastern White Pine producers was strong sales of 10-in. and 12-in. Standard, which pushed order files out three to five weeks. Sales of other widths and grades were slower. Sales activity in the Ponderosa Pine board market was sporadic. Overall, sales were lackluster. The market for Ponderosa Pine Moulding and Shop grades remained quiet. Need rather than price seemed to be the determining factor where buying decisions were concerned. The Radiata Pine market remains flat for Mldg&Btr. Traders reported booking business for November delivery at current price levels. Expecting Western Red Cedar market activity to have begun to subside by now, some producers were pleasantly surprised by the volumes still selling heading into October. Prices were steady.

Panels: OSB sales volumes at the mill level were light and most came with counters to quoted levels. Wholesalers concentrated on selling off their contract commitments, usually below replacement costs. Traders were successful putting some back to back business together. Prices were weak. Southern Pine plywood buyers purchased sparingly, limiting the extent of mills’ order files to the week of Oct. 8. Volumes available for quicker shipment were popular among those buyers needing to cover immediate needs. Western Fir plywood producers were forced to aggressively seek CDX sales. Order files extended into the week of Oct. 8, but plenty of volumes were available for quicker shipments. The Canadian plywood market developed into a two tier market, as some distributors sold at below replacement costs in order to lighten inventory positions. Distribution yards reported steady sales. Particleboard producers continued to adjust production according to demand, still producing more than what is being consumed. MDF production was readily absorbed, with any extra production quickly bought up.

For more on RISI, click here.

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Pending home sales slip in June

BY HBSDealer Staff

The Pending Home Sales Index, a forward-looking indicator, declined 2.6% to 75.7 based on contracts signed in June from an upwardly revised level of 77.7 in May, according to the National Association of Realtors (NAR).

The index, released Tuesday, is 18.6% below June 2009 when it was 93.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months, according to the NAR.

Lawrence Yun, NAR chief economist, said lower home sales are expected in the short term.

“There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” Yun said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”

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