Followers of America’s troubled housing sector will have to wait until tomorrow – when June’s figures for US new housing starts are released – for the official take on its health. Yesterday, they had to make do with an 11-month update from Wolseley, the FTSE 100 distributor of building products that drew two thirds of last year’s profits from North America.

As might have been expected, trading remains tough. Sales by its US building materials division were down 25 per cent year-on-year, with US dollar-denominated profits off 67 per cent. Changing patterns of demand – largely related to the woes of the US automotive industry in the Midwest – have also seen it shut 24 branches, which will trigger an additional £9 million restructuring charge.

But the upshot – that this year’s pretax profits will be 5 per cent below those of last year – did little to upset. Indeed, the 1.3 per cent rise in Wolseley’s shares yesterday indicated that the stock market had been braced for worse.

For a start, US building materials accounts for only 14 per cent of group sales. Wolseley’s Stock lumber business – which, drawing 84 per cent of its revenues from residential construction, is the worst affected – remains profitable, and is set to benefit from diversification into less-volatile industrial and repair and maintenance markets. Further, Wolseley’s US plumbing and heating operations – especially its Ferguson offshoot – continue to prosper, with yesterday’s 20 per cent rise in year-on-year profits coming in far ahead of expectations.

Elsewhere, Wolseley’s performance in Europe was bolstered by last year’s £1.4 billion purchase of DT Group, the Nordic distributor of building materials, which makes the company a significant player in Scandinavia for the first time.

But even stripping out the effects of that acquisition, revenues from Europe – which now accounts for 46 per cent of group sales – were up 15 per cent, with profits ahead 5 per cent. Wolseley says the signals in the UK market are “difficult to interpret” while the outlook for the Nordic and Central Europe region are “generally positive”.

Continued weakness in the US will undoubtedly remain a drag on sentiment in the short term. But the 15 per cent discount of Wolseley’s shares to their sector provides some support, as does the recent private equity purchase from Home Depot of Hughes Supply, a big rival, at a multiple of 11 times current-year operating profits. So, too, does the company’s efficiency as an acquisition machine that still has plenty of scope to consolidate its position as the world’s biggest distributor of plumbing and heating supplies. At £11.70, or 11.8 times next year’s earnings, Wolseley is worth holding.

Emap

Tom Moloney was ousted as Emap’s chief executive in May, but that has not stopped the publisher from tidying up its portfolio four times in the past month. The interim strategy (Alun Cathcart, the chairman, is handling the job while a new chief executive is sought) involves a faster reshuffling of assets than Mr Moloney envisaged, but it is hard to discern much point to the media company at the moment. Yesterday, three Irish radio stations went for £135 million – admittedly a very healthy price – showing that investors across the Irish Sea are willing to put a higher price on British media assets than the City of London. The stations went for 19.2 times operating profit, to Communicorp, a group backed by Denis O’Brien, slightly greater than the price that Chrysalis Radio achieved.

That follows the sale of the French exhibitions business for €85 million, offset by a speculative £3.7 million investment in an Indian publisher and the £20 million buy of the Infrastructure Journal – which hardly gives investors a clue as to whether Emap believes that it could be a global magazine publisher, a long-term British radio group or a business-to-business information player. So it is hardly clear how the investor should work it out, either.

The business-to-business side is performing well, with underlying revenues up 6 per cent in the quarter to June, in a sector where digital is having only a limited impact; but consumer magazines are about to plunge into what could be a prolonged crisis, with magazine advertising off 13 per cent. The conglomerate structure helps to offset this, but not enough to generate growth. With so much uncertainty, Emap’s current rating, 13.5 times expected earnings, is about right. Avoid until new leadership emerges.

Burren Energy

Corporate financiers rarely work at a pace that suits a company’s financial calendar. So it should not have been a surprise that yesterday’s first-half trading update from Burren Energy was not accompanied by a hoped-for acquisition – or even mention that such deals remain part of the plan. Still, that omission was disappointing for an oil producer that needs a third leg to its business to reawaken dormant investor interest.

For now, its two key operations – oilfields in Turkmenistan and Congo-Brazzaville – continue to tick along. Production in the six months to June 30 rose 14 per cent, with a 17 per cent increase in output from Turkmenistan more than offsetting a dip in volumes from Congo. That retreat in West Africa was due to the closure of some wells for conversion to more efficient extraction methods, which should significantly boost oil output by this time next year. The fact that ENI, of Italy, is now the operator of M’Boundi should also mean that greater technical expertise is applied over the longer term.

Elsewhere, Burren is increasing exploration over the next few months, with four wells planned in Congo, India and Egypt. If success with the drill bit ensues, Egypt could become a standalone business.

Burren’s exploration efforts are pedestrian compared with many of its rivals and its projected increase in production lags that of Premier Oil, Cairn Energy and Soco.

For that reason, Burren, at 852p, down 4 per cent this year, is no more than a hold until its acquisition strategy comes good.

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