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Wolseley reports 50pc drop in Q1 profits

Wolseley has reported a 50 per cent drop in first quarter profits warning that some of its markets had still not hit the bottom.

In a trading update for the three months to 31 October, the plumbing and heating giant said it expects commercial and industrial markets to “continue to deteriorate further in the short term” despite signs of stabilisation in its housing and maintenance business.

The Reading-based firm, which trades as Plumb Centre and Build Centre in the UK, said pre-tax profits from continuing businesses fell 50 per cent to £75 million in the three months to October 31 on a constant currency basis.

The firm said turnover was down 20 per cent during the three months with margins squeezed by the tough market conditions.

Wolseley also racked up a further £10 million in restructuring costs across the group - which saw another 500 job losses on top of the 10,000 shed during the previous year. The cuts fell mainly in the US.

In the UK and Ireland revenues slid by around 13 per cent although profits rose 17 per cent due to the impact of earlier cost-cutting actions.

Wolseley chief executive Ian Meakins said: “The overall trading environment continues to be extremely tough.”

The company noted “increasing signs” of steadying residential and maintenance work while commercial and industrial markets are declining at a lower rate amid a fierce battle for work.

The trading update said: “Trading profit in the commercial and industrial division continues to be affected by aggressive price competition and competitive tendering.”

Elsewhere US revenues slid 24 per cent at constant currency with Canadian markets also suffering. In Europe, its Nordic operations posted a 19 per cent revenue fall, with France down 17 per cent.