Wolseley in grim outlook as profit falls
SHARES in Wolseley took a hammering yesterday after the world’s biggest builders’ merchant and plumbing supplier said it saw no sign of recovery in its key construction and industrial markets.
Group profit plunged 41 per cent in the three months to the end of October to £104m as revenues fell 13 per cent to £13.4bn.
Chief financial officer Steve Webster gave a downbeat assessment of Wolseley’s markets where construction activity across the board has contracted as a result of the recession.
He said: “You can tell from what we’re saying about the industrial and commercial market, we do expect that to get worse before it gets better.”
In Britain, where Wolseley competes for sales with Travis Perkins, builders will build the smallest number of houses since 1926, although housebuilders like Barratt have reported some signs of improvement for 2010.
Investors shared Webster’s pessimism and sold Wolseley shares. The stock fell 3.5 per cent yesterday and at 1324p is just a fourth of the value it was trading at two years ago.
Wolseley, which tapped shareholders for £1bn earlier in the year, said net debt stood at £1.22bn, up from £959m at the end of July.
FinnCap analyst Les Kent said it was “disturbing” that debt was still rising, reiterating his belief that the company should have raised more capital when it had the chance.
In the absence of growth in construction, Wolseley said it would concentrate on stripping costs from the business. Over the quarter a further £20m was saved, according to Webster.
Wolseley has cut 10,000 staff since 2008.