Shares in Wolseley were up on the FTSE 100 in morning trading after the plumbing goods supplier returned to profit in the first half of the year ended 31 January 2011.
The group said that revenue increased five per cent from the same period last year to £6.6 billion. The group also went from a pre-tax loss of £261 million in the first half of last year to a pre-tax profit of £195 million.
As predicted by analysts, Wolseley said it was reinstated a dividend, set at 15 pence per share.
During the half year period the group reduced its net debt by £262 million, in part by disposing of its Italian business.
Ian Meakins, Chief Executive of Wolseley, said, "This was a good first half performance, driven principally by resilient RMI markets and the considerable attention that we have paid to improving customer service, protecting gross margins and controlling costs. Construction markets have now broadly stabilised in most of our geographies, particularly the new residential and RMI segments in the USA. The overall macro-economic environment in several regions continues to be fragile and pricing competition remains intense. The impact of recent VAT increases and government spending cuts leaves the outlook in the UK more uncertain.
"We continue to maintain our emphasis on protecting market share and gross margins while keeping a tight control on the cost base to maximise operating leverage. The Group expects to continue to grow in the second half of the year, though the comparatives will now be much more demanding. The reinstatement of the dividend reflects the strength of our balance sheet and our confidence in the future trading prospects of the Group."
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "The group's restructuring, aided by low interest rates and a recovery in construction markets remains the core story. A slow sell-off of identified non-core businesses at the periphery of the group's geographical footprint is still ongoing - operations in Italy have recently been sold - whilst a focus on cash generation and a near £1 billion rights issue back at the height of the financial crisis have rescued the balance sheet.
"On the downside and with comparatives set to become more difficult, management have again peppered outlook comments with caution, whilst the shares have already attempted to price in today's announced recovery, outperforming the FTSE-100 index by a substantial 25pc over the last year alone.
"In all, the shares remain a geared play on economic recovery, particularly in the US, with management confidence for growth in the second half underlined by a resumption of the dividend payment. As such, while the shares continue to climb a 'wall of worry', market consensus opinion currently denotes a strong hold, held back for now by valuation concerns."
By 09:25 shares in Wolseley were up 3.45 per cent on the FTSE 100 to 2,161.00 pence per share.