No recovery until 2010 says Wolseley
Published: 28 July, 2009
READING: Wolseley reported a 60% fall in pre-tax profit over the past 11 months to £233m with group revenue down by 16% to £13.25bn.
A trading statement issued yesterday for the 11 months to the end of June, Wolseley said it did not expect the market to show signs of improvement until mid-2010 at the earliest.
Wolseley expects a slower rate of decline in repair and maintenance markets against rapidly deteriorating commercial and industrial business.
Steve Webster, Wolseley group finance director, said: "It is too early to call as to when businesses will recover; the picture is different depending on your sector and geography."
He said there would be more cost cutting so save £200m this year and more job losses. The group has shed 30 000 jobs since autumn 2008: 3254 in the UK and Ireland.
Trading profit in the UK and Ireland was down 75% compared to 2008. Wolseley's Irish division, where new housing activity is some 70% below the previous year, lost £20m. The company thinks it unlikely the Irish market will return to levels of activity experienced in the past decade.
Wolseley is to sell its Belgian, Slovakian and Czech businesses, the latter two acquired in 2007. Webster said further disposals of its European businesses were possible. Many of these have suffered drops of as much as three-quarters in trading profits compared with last year's levels. "We have to continue to evaluate every one of these territories," he said. "It's not about having a European network for its own sake. It has to pay for itself."
Wolseley's performance and market assessment are in line with market expectations and shares were up 0.67% at 1209 pence yesterday morning.
Andy Brown, analyst at Panmure Gordon said: "With no new negatives the share price should hold up... although the key sentiment driver from here will be recovery in the US housing market, which does not appear imminent."