Wolseley, the FTSE 100 plumbing and building products supplier, warned it is facing a worsening US market as it cut another 3,000 jobs in the States.
The company told its annual meeting yesterday that group trading profits had collapsed by about 12 per cent in the three months to the end of October, with profits in the US, which generates approximately half of the group's overall revenues, falling by 30 per cent.
The company hopes to save 60m annually with the latest cuts. Over the past 16 months, Wolseley has culled 9,000 jobs about 11 per cent of its workforce, including 450 in the UK in response to the challenging market conditions.
Chip Hornsby, Wolseley's chief executive, and Stephen Webster, the finance director, yesterday refused to rule out further job losses in either the US or Europe and said market conditions will continue to be monitored and swift and decisive action taken if needed.
The company is being affected by the slowing US housing market, the weak dollar and low consumer confidence and believes the situation in America is likely to deteriorate further until the "current levels of unsold inventory have declined and the full effects of problems in the sub-prime market have been assimilated".
The statement follows figures from S&P/Case-Shiller earlier this week that showed American house prices falling by 4.5 per cent in the third quarter of the year. Mr Hornsby admitted the "US is bordering on recession", but still believes the US economy could go either way.
The group has also noticed signs of a slowdown and weakening in the UK and Europe, although this part of its business has been bolstered by its commercial and industrial business. Trading profit in Europe was up 15 per cent and revenues rose 25 per cent. Wolseley also said it has set aside 450m for acquisitions this financial year and has made 10 bolt-on acquisitions, costing about 170m, which are expected to add about 219m to group revenue annually.
Analysts at Panmure Gordon labelled yesterday's statement as a "profit warning from Wolseley" and put its "buy" rating on the plumber on review. Shares in Wolseley ended up 7p at 648p.Reuse content