Wolseley, the international building supplies group, warned of dire conditions in its markets, as it posted a 60 per cent slump in pre-tax profits and said it was selling its Belgian, Czech and Slovakian businesses.
The group, which operates 482 Plumb Center merchants in the UK, said the market conditions for its commercial and industrial business, as well as its repair, maintenance and improvement operations, "continued to deteriorate". While Wolseley said it was seeing signs that the UK residential market was stabilising ahead of the US, it warned that a quick recovery was unlikely.
The building supplies group has suffered a torrid past year, including axing nearly 10,000 jobs, the departure of its chief executive and tapping investors for about £1bn in April to reduce its debt mountain. Ian Meakins replaced Chip Hornsby this month.
Steve Webster, Wolseley's finance director, said: "The repair, maintenance and improvement market is still getting worse but at a slower rate. The commercial and industry segment is getting worse at a faster rate." Mr Webster said the issue for the commercial market was the lack of available financing for developers to build major projects, such as hospitals, schools, prisons and leisure complexes.
In a pre-close trading statement yesterday, Wolseley said its pre-tax profits from continuing operations tumbled by 60 per cent – or 72 per cent at constant currency – to £233m over the 11 months to 30 June, in line with market expectations. Over the period, the group's revenues from continuing operations fell by 16 per cent at constant currencies to £13.3bn.
In the UK and Ireland, Wolseley trading profit plunged by 75 per cent for the 11-month period, dragged down heavily by a dire performance in Ireland. Wolseley said the Irish property market remains "severely depressed" with new housing activity down by 70 per cent in the 11 months to 30 June, compared with the same period the year before.
In North America, Wolseley's underlying trading profit, excluding property profits, fell by 35 per cent, but its Ferguson business gained market share. In May, Wolseley said it had sold 51 per cent of its US-based Stock building supplies division to reduce its losses. After a strategic review of its Central and Eastern European operations, Wolseley has decided to sell its Belgium, Slovakian and Czech Republic businesses. The company said a number of third-parties had expressed an interest in acquiring the businesses as a going concern.
To slash its cost base, Wolseley has axed nearly 9,400 jobs over the past 11 months in Europe and North America. It has cut a total of about 30,000 jobs over the past two years. Yesterday, Wolseley said that it expects restructuring actions, which are continuing, to deliver cost savings of £200m for the year to 31 July, equal to annualised benefits of £392m. Since 30 April 2009, the group has reduced its net debt by a further £108m to £1.43bn.