Wolseley warning after first-quarter profits halved

Published on Wednesday 18 November 2009 20:26

GLOBAL plumbing and heating giant Wolseley warned yesterday that some of its markets had still not hit the bottom, as first-quarter profits slumped by half.

The firm expects commercial and industrial construction markets to "deteriorate further in the short term", despite signs of stabilisation in its housing and maintenance business. The Reading firm, which trades as Plumb Center and Build Center in the UK, said pre-tax profits from continuing businesses fell 50 per cent to 75 million in the three months to 31 October.

Wolseley said revenues were down 20 per cent during the period, with margins squeezed by the tough market conditions. The firm also racked up a further 10m in restructuring costs across the group – which saw a further 500 job losses on top of the 10,000 shed during the previous year. The cuts fell mainly in the US.

In the UK and Ireland, revenues slid about 13 per cent, although profits rose 17 per cent on the back of previous cost- cutting.

The company noted "increasing signs" of steadying residential and maintenance work, while commercial and industrial markets are declining at a lower rate amid a fierce battle for work.

"Trading profit in the commercial and industrial division continues to be affected by aggressive price competition and competitive tendering," the group said.

Elsewhere, US revenues slid 24 per cent at constant currency with Canadian markets also suffering. In Europe, its Nordic operations posted a 19 per cent revenue fall, with France down 17 per cent.

Seymour Pierce analyst Kevin Lapwood said the fall in profits was in line with expectations, but he added: "There is little sign of the situation improving."

Wolseley posted a pre-tax loss of 766m for the year to 31 July after more than 1 billion in write-downs and restructuring costs.