British building materials group Wolseley reported a 23 per cent fall in first-half profit today, hit by the collapsing US housing market, and warned of tougher conditions, sending its shares to 5-year lows.
Wolseley, the world's biggest distributor of plumbing and heating products, earns half of its revenues in North America. "Since our last update in January, markets have continued to weaken," chief executive Chip Hornsby told reporters.
"US housing in particular is still declining against the backdrop of the global credit squeeze, which is affecting consumer confidence in many more markets including Europe."
The news came after a fire sale of Bear Stearns on Sunday and a Federal Reserve emergency cut of a key lending rate sparked fears that the worldwide credit crisis will claim more casualties. Global stocks sank and the dollar tumbled on Monday, after the biggest sign yet of how devastating the credit crisis is for Wall Street.
Wolseley reported trading profit of 300 million pounds ($591 million) for the six months to end-January, compared with analysts' average forecast of 307.6 million pounds, as its U.S. unit Stock swung to a loss of 44 million.
Wolseley defines trading profit as operating profit before amortisation and impairment of acquired intangibles.
It warned the US housing market was likely to deteriorate further and put additional pressure on the "repair, maintenance and improvement" (RMI) market.
Its North American division includes plumbing and heating operation Ferguson and building materials unit Stock, which bore the brunt of the continued decline in new residential housing.
Wolseley said housing starts fell 25 percent during its first half to an average of 1.2 million, with the trend worsening further to 1.0 million in January.
In Europe, growth rates are also likely to slow, although the RMI and commercial industrial segments are expected to remain marginally positive, Wolseley said.