Profits down at Wolseley, job cuts

Wolseley, one of the largest distributors of building equipment in the world, with strength in plumbing and heating supplies, said profits fell 12% in the previous quarter as the US property market came to a standstill. Shares in the company fell to a 4-year low and the company expects the US housing market to deteriorate.

The company slashed approximately 6,000 jobs in its last financial year and shed another 1,700 in its first quarter to end October and proposes to slash a further 1,300 in the current quarter. Wolseley said the combined annual savings relating to redundancies would be approximately £60 million.

Chip Hornsby, chief executive, delivered the trading update just a few hours after figures showed American house prices fell by record amounts during the same period. Down 4.5%, the figures were the worst since the survey started in 1987, with the large amount of vacant new homes in the country weighing down on prices.

Mr Hornsby predicted, in the US, the housing market is likely to worsen further until the current high levels of unsold inventory have declined and the full impact of problems in the sub-prime market have been assimilated.

In Europe, revenue increased over 25% and trading profit over 15%, the company said this was due to solid growth in the RMI, commercial and industrial segment.

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