Wolseley warns of worse ahead as profit dives 60%

Building materials giant Wolseley has revealed that its pre-tax profit is down 60% on last year and said markets will “continue to deteriorate”.

In a trading update this morning for the 11 months to 30 June, the company said turnover was down 16% in constant currency (1.5% down taking into account exchange rate fluctuations).

However, it pointed to signs of stabilisation in the new residential market and said the repair, maintenance and improvement market would decline at a slower rate.

Turnover in the UK and Ireland fell by over 15% in the 11 months and trading profit was about 75% down on last year.

Since 30 April this year it has reduced net debt by £108m to £1.4bn and expects a further reduction in July.

It also plans to sell its operations in Belgium, the Czech Republic and Slovakia because they are not of a sufficient scale to continue to deliver “an appropriate financial return”.

Liberum Capital analyst Charlie Campbell said: “We believe that Wolseley's long term recovery story has been hidden behind disintegrating trading trends, but that this is now set to change as trading has stabilised and the market can look forward to its new chief executive setting out plans for margin recovery.”