Wolseley puts units under review as profits dive
Tuesday 23 March 2010
Wolseley is prepared to sell some of its struggling units after disclosing a 34 per cent drop in interim trading profits, the company said yesterday.
The world's biggest building materials supplier, and operator of the Bath Store retail chain, said that it would cut resources to 19 of its 41 businesses, promising to sell them if they do not improve in the short-term.
The affected units include Brossette, the French plumbing business and Build Centre, a UK builders' merchant.
The move follows a review by the chief executive, Ian Meakins. "We won't delay too long if we see a business that can't perform for us in the long-term. Over time, the group's intention is to operate fewer, larger, related businesses in core geographies," he said.
Wolseley has struggled from a lack of demand during the recession. Yesterday, Mr Meakins warned that the group, which last year raised £1bn in a rights issue to help pay off some of its £3bn pile, faced an uncertain economic outlook: "Looking to the future I think the business has held up pretty well in terms of the gross margin and the cost saves coming through. Market conditions remain challenging, though we are now seeing stabilisation in many of our markets," he said.
The group has already off-loaded businesses in Ireland, but Mr Meakins said that the balance sheet was strong enough to avoid forced sales. Wolseley has cut its debt to just under £1bn.
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