31 July 2018 – interim results

It is disappointing to see that the builders merchant and home improvement group has reported interim results that fell short of expectations.  Although revenues rose 4% to £3.36bn, adjusted pre-tax profits declined by 4.6% to £167m with earnings per share on the same basis falling by 4.1% to 53.5p.  The interim dividend was a same again 15.5p.  Net debt at the end of the period had risen to £461m from £377m a year earlier.  Although the group’s trade business coped well with difficult trading conditions, the consumer focused business Wickes has struggled and the business is going through a cost reduction programme.  We believe the share price fall has been overdone and rate the shares a BUY FOR RECOVERY .