Wolseley announces 25% fall in trading profit

Building materials supplier, Wolseley, has posted a 25% decline in 5-month trading profit.

The company, which is one of the largest distributors of building equipment in the world, warned that a deteriorating US housing market is spreading to home repairs and improvement and across Europe, sending its shares plummeting 12%.

Furthermore, pre-tax profit fell over 30% in the 5 months to the end of 2007 as its US business was affected by the continuing slowdown in housing starts, falling consumer confidence and a weakening US dollar.

A spokesperson said the board expects business conditions in a number of the group’s markets to become more challenging over the next few months.

In its North America division, which earns half the group’s revenues and includes building materials distribution unit, Stock, and plumbing and heating operation, Ferguson, reported a 10% decline in revenue and a 40% fall in trading profit.

Weak US housing starts, which fell 26% during the period and growing competition drove the Stock division to fall to a loss of £25 million.

The company has shed 6,000 jobs in its last financial year when it posted its first profit fall in over 10 years and has since slashed a further 3,000 jobs to combat a tough US housing market to make £60 million of annual savings.

Steve Webster, the group’s finance director, said there was a headcount freeze across all its businesses currently, however, the group has no plans to cut further jobs.

Shares in Wolseley have deteriorated 40% over the last 6 months.

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