The Week In Review: Damaged Wolseley is in need of urgent repairs

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The foundations shook at Wolseley, the plumbing and building materials group, as £600m of value was wiped off within seconds of the first shares changing hands. The group warned that profits for the five months to the end of December are likely to be down by almost a third. The slump in US housing demand is to blame. The crisis is also spreading to Europe.

Wolseley is carrying out urgent repair work on its overheads but it may not be enough to stop the roof falling in again. The group admits present market conditions are likely to worsen. Dearer mortgages and tougher lending policies are bringing home sales to a near standstill, while the commercial building market remains fragile.

The conditions may throw up opportunities, however. Wolseley made 10 bolt-on acquisitions worth £170m during the spell and tougher trading means smaller rivals might fall into its lap. But this is scant consolation for retrenchment on an epic scale. Around 3,000 jobs have been cut, saving £60m a year and further action is not being ruled out. Trading profits in the US are down 40 per cent. Europe has not suffered so badly – yet – with profits up 1 per cent on revenue 17 per cent higher but some markets, such as Italy, France and Austria, are weak.

The shares have lost 45 per cent of their value in the past year. By the close, they had clawed back a third of yesterday's initial falls. Brokers are expecting profits to fall 20 per cent this year but at this stage accurate forecasting is impossible. Avoid.


When the orthopaedic parts group Corin won approval last July to sell hip implants in the US, it called it the most important event in its history. Unfortunately, it chose yesterday to justify its comments when shares were falling. Its own suffered but it should be a temporary mishap.

The US is the largest market for orthopaedic products and now accounts for more than 70 per cent of Corin's business. Shares are selling on around 17 times expected earnings, which is toppy but sustainable . The prospect of a bid from a healthcare group also gives support to the price. Buy.

Hat Pin

A botched relaunch of one of its key brands wiped 41 per cent off executive search group Hat Pin. Full-year profits to the end of December will come in around £2.8m, more than £1m less than expected, after its main UK trading company, the Talent Business, hit the buffers. The current year looks unclear. Nearly three-quarters of profits should come from Asia and the Fast East where growth remains buoyant, but there are signs of price weakening in the UK. Avoid.


Chemring supplies the Ministry of Defence and the Pentagon with flares and other decoys used to deflect missiles from aircraft, boats and military installations. Its results yesterday lit up an otherwise bleak corporate landscape. Sales, profits, dividends, orders, they are all growing at a double-digit rate, suggesting that the company occupies a parallel universe to the rest of the stock market. Up 20 per cent over the past 12 months, there could still be some fireworks in the price. Its own broker believes there is scope for a 20 per cent rise. Buy.


The computer security group NCC sends hit squads into firms to ensure that systems are safe from hackers, and that staff are security conscious. It also tests systems and has built up a sizeable business providing "escrow solutions". This is where it earns a fee for holding a client's secret source code enabling systems to function and which it will only release in the event of a crisis such as the software supplier going bust.

Both sides of NCC's business have grown strongly, contributing to a 42 per cent increase to £16.4m in revenue at the half-year. Profits are up by a similar amount at £4.6m, and there is a 50 per cent hike in the dividend. Hold.

GW Pharmaceuticals

GW has developed a cannabis-based painkiller called Sativex, which is available in Canada for cancer sufferers, but the real hope is that it will win approval from US and European drug regulators.

GW has struck a deal with the Japanese giant Otsuka, which is underwriting costs of the clinical trials, now entering a crucial stage in the US. And GW is trying to win approval from European watchdogs. Hold.

Tullow Oil

Tullow Oil took a battering after it revealed in its annual trading statement that production for this year would be less than analysts were expecting. Since the start of the year it has lost nearly 11 per cent of its value. Now could be the time to sink some cash into Tullow. But beware, this is a punt more on future potential than near-term earnings excitement.

Thomson Intermedia

The new management team at the advertising monitoring group Thomson Intermedia has marked its arrival with a flourish – a profit warning, strategic review, and search for a new finance chief. The plan is to beef up the operation by developing some of the close relationships which exist with clients. Buying the shares is a punt on whether investors believe the new management is capable of taking it forward. But that won't happen overnight. It is still too early to rush in.


Trafficmaster provides satellite navigation based on information on traffic jams, which can help motorists to save fuel and cut down on nasty emissions.

But those looking for some excitement even in these fraught markets will probably go elsewhere. The shares have fallen 44 per cent in a year. In a trading update yesterday the company said that following a strong first half, full-year results would be in line with expectations. The shares did not move. Hold for now.


Fortunately, the steel structures used to support buildings such as the Emirates Stadium hold up better than the share price of the company that supplied the fabrications.

The company, in a trading update for the year just ended, said it expected profits of £42m – a shade below some forecasts. The jury is out on how the banks will in future respond to requests for loans for building projects. And there have been signs that the London commercial property market is slowing down. The shares will probably remain friendless until evidence emerges of an improvement in trading conditions. Hold.

Clipper Wind Power

The company sells wind turbines to power generators, and harbours ambitions to operate wind farms across the globe. There are no shortage of orders, but progress has been blighted by manufacturing difficulties, leading to cost over-runs and financial penalties for late deliveries.

In a trading update, Clipper said it expects second-half losses to be on the same scale as the first, implying a total deficit for the year of £81m. The shares floated on AIM at 190p in 2005. Wind power is here to stay, and Clipper can take full advantage. Hold.


It is times like these when investors at 3i, Europe's largest private equity group, can earn their spurs. Instead of ducking for cover, 3i is excellently placed to take advantage of depressed markets. It has the muscle to exploit its position and impose realistic valuations on companies needing cash to expand. So it is encouraging to hear that the group is using its financial clout to identify sound investment prospects despite the financial outlook. Buy