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Wolseley hit by housing downturn Wolseley hit by housing downturn
(10 minutes later)
Building materials giant Wolseley has seen profits drop 77% after being hit by the US and UK housing slowdown.Building materials giant Wolseley has seen profits drop 77% after being hit by the US and UK housing slowdown.
Pre-tax profits for the year to 31 July fell to £145m ($266m) from £634m a year ago, and Wolseley said conditions in many of its markets may get worse.Pre-tax profits for the year to 31 July fell to £145m ($266m) from £634m a year ago, and Wolseley said conditions in many of its markets may get worse.
As well as a slowdown in the UK, the US housing slump, where it makes about half its sales, has also hit profits.As well as a slowdown in the UK, the US housing slump, where it makes about half its sales, has also hit profits.
The world's biggest distributor of plumbing materials said it had cut 7,700 jobs since since last August.The world's biggest distributor of plumbing materials said it had cut 7,700 jobs since since last August.
Profits before one-off costs, which included restructuring costs and branch closures, fell 30% to £527m.Profits before one-off costs, which included restructuring costs and branch closures, fell 30% to £527m.
The firm made 7,100 of the job cuts in the financial year, with a further 600 since then.The firm made 7,100 of the job cuts in the financial year, with a further 600 since then.
Investors cheered
Wolseley - which runs Plumb Center and Build Center in the UK - said it had no plans to raise extra funds or to renegotiate covenants held with banks.Wolseley - which runs Plumb Center and Build Center in the UK - said it had no plans to raise extra funds or to renegotiate covenants held with banks.
But it said these remained options should market conditions deteriorate dramatically.But it said these remained options should market conditions deteriorate dramatically.
Chief executive Chip Hornsby said that controlling costs and cash flow was the priority to ensure the firm was "well positioned for any market recovery".Chief executive Chip Hornsby said that controlling costs and cash flow was the priority to ensure the firm was "well positioned for any market recovery".
About £176m a year is expected to be saved through restructuring and other initiatives, the firm said.
Wolseley shares rose 7% in early trading - with investors cheered on guidance that it was likely to remain within its banking covenants.
The company employs 14,000 people in the UK and 1,300 staff in Ireland.