Wolseley in grim outlook as profit falls

SHARES in Wolseley took a hammering yesterday after the world&rsquo;s biggest builders&rsquo; merchant and plumbing supplier said it saw no sign of recovery in its key construction and industrial markets.<br /><br />Group profit plunged 41 per cent in the three months to the end of October to &pound;104m as revenues fell 13 per cent to &pound;13.4bn.<br /><br />Chief financial officer Steve Webster gave a downbeat assessment of Wolseley&rsquo;s markets where construction activity across the board has contracted as a result of the recession.<br /><br />He said: &ldquo;You can tell from what we&rsquo;re saying about the industrial and commercial market, we do expect that to get worse before it gets better.&rdquo;<br /><br />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.<br /><br />Investors shared Webster&rsquo;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.<br /><br />Wolseley, which tapped shareholders for &pound;1bn earlier in the year, said net debt stood at &pound;1.22bn, up from &pound;959m at the end of July.<br /><br />FinnCap analyst Les Kent said it was &ldquo;disturbing&rdquo; that debt was still rising, reiterating his belief that the company should have raised more capital when it had the chance.<br /><br />In the absence of growth in construction, Wolseley said it would concentrate on stripping costs from the business. Over the quarter a further &pound;20m was saved, according to Webster. <br /><br />Wolseley has cut 10,000 staff since 2008.<br />