Building supplies company Wolseley announced today that pretax profit for the year fell 54 per cent and reiterated its bleak view of the market for 2010.
The British company, the parent of Wolseley Ireland, predicted commercial and industrial markets would get worse but said residential markets would show continuing stabilisation.
It expects its profit in the second half to show improvement as it benefits from cost-cutting measures.
During the full year ended July 31, it earned adjusted pretax profit down 54 per cent to £293 million pounds on revenue that fell 2.5 per cent, or by 16.3 per cent at constant currency, to £14.4 billion.
Stripping out the one-off costs, Wolseley’s pre-tax profits of £293 million were ahead of expectations despite being 54 per cent below the £631 million seen previously - sending the firm’s shares higher.
Wolseley Ireland owns companies such as Brooks, Heat Merchants, Tubs Tiles and Electric Merchants. In Ireland, jobs have been cut by almost half since the market peak in early 2007.
Underlying sales in the UK and Ireland, which account for almost a fifth of group revenues, were down 17 per cent to £2.7 billion amid fierce competition. The company noted the construction market remains severely depressed with activity levels down by 70 per cent and further economic uncertainties affecting the renovation, maintenance, and improvement market.
Adjusting for the impact of a stronger dollar, US revenues also slumped more than 17 per cent. The firm is seeing “signs of stabilisation” in the new housing market, although housing starts remain at historic lows.
Wolseley warned of the lingering impact of rising unemployment and repossessions and tight credit conditions on the business. The company, which now has around 50,000 staff, hopes its cost-cutting drive will save an annual £160 million in the United Kingdom.
Chief executive Ian Meakins said further actions to lower costs would be taken “according to anticipated local market conditions”.
“We think the road to recovery will be long and slow,” Mr Meakins added.
In a briefing note this morning, Bloxham noted a Department of the Environment-commissioned report estimates that Irish surplus housing inventory is equivalent to some four years supply based of current demand, highlighting the difficult outlook for the Irish construction market.
Agencies