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Wolseley shares dip as struggling European markets offset US strong demand

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Plumbing and building supplies firm Wolseley

Plumbing and building supplies firm Wolseley

Plumbing and building supplies firm Wolseley

Shares in British plumbing supplies group Wolseley (WOS.L) fell almost 3 percent on Tuesday after a one-off charge and struggling European markets offset strong demand for its services in the United States.

The company, which operates the Plumb Center and Ferguson chains in the U.S. and Britain, reported a 245 million pound impairment charge on Tuesday relating to its 2006 purchase of DT Group in the Nordic region.

The charge pushed Wolseley to a net loss of 58 million pounds in the six months to Jan. 31.

"Shares in Wolseley have leaked to the foot of the UK’s flagship index this morning ... dented by impairments to its Nordic business which compound the diverging fortunes of a recovering US and struggling European markets," said Mike van Dulken, Head of Research at Accendo Markets.

Shares in the company were 2.6 percent lower by 9:45 a.m., making it the bigger faller on the FTSE 100 .FTSE index.

Wolseley, which operates in the United States, Canada, UK, Nordics, Central Europe and France, said it expected underlying group trading profit for its financial year to be in line with expectations after strong demand in the United States helped earnings rise 12 percent in its first half.

The company paid an interim dividend of 30.25 pence per share, an increase of 10 percent.

Underlying trading profit rose to 390 million pounds for the period, compared to 351 million a year earlier.

The company also said it expected a like-for-like revenue growth rate in the second half of the year of around 6 percent.

Wolseley said it had seen very strong revenue growth and market share gains in the U.S., which accounts for 76 percent of its trading profit. Revenue grew by nearly 12 percent on a like-for-like basis in the first half of the year.

Chief Executive Ian Meakins, in the role since 2009, said he expected improvements in its markets like Canada, Britain, Sweden and Denmark over the coming months.

"We do expect to see improvements in the second half of this year versus last year ... overall we are pleased to see a better topline performance across the whole of the group," he told reporters.

"We are working hard to make sure we get the flow through in Europe in the second half of the year and we are confident we (will) continue to deliver good attractive growth for the short and the long term," he added.

Reuters