Wolseley plc, distributor of plumbing and heating products to professional contractors and a supplier of building materials, reported overall that sales for the first nine months ended April 30, 2008, were up 2% and profit fell 23%.
As a result of what the distributor called tough market conditions, Wolseley has made further cost reductions in North America since April 30, 2008. The distributor has:
-closed 75 branches and reduced headcount by 200 at Ferguson -closed or consolidated an additional 15 locations in Canada, with a reduced headcount of 50 people
Given the continuing tough market conditions, our response has been to take further action to lower the cost base and improve cash flow, while continuing to pursue our longer term strategic aims," said Chip Hornsby, CEO. "The cost-reduction actions outlined today will enable us to restructure the business further, so that we are better positioned for the challenges ahead."
Wolseley reported that in the U.S. housing and repairs, maintenance, and improvement markets have continued to soften but commercial and industrial markets have held up well. In Europe there has been a more pronounced slowdown in the UK over recent weeks and many other European markets have continued to soften.
In North America, Ferguson sales grew 1% due to acquisitions. Organic revenue fell 3% and profit was 1% lower than the prior-year period.
Stock Building Supply sales fell 25%, and recorded a net loss of $158 million.
Wolseley Canada for the first nine months had 2% growth, with profit dropping 15% due to previously announced one-off branch closure costs.
In Europe, revenue at Wolseley UK, including Ireland, was up 3% and profit fell 6%. The distributor said that Wolseley UK saw a challenging April as the market slowed "significantly."
Wolseley France sales increased 3% in the nine-month period and profit was 18% lower. Sales in Central and Eastern Europe were up 3% and profit was 50% lower.
Further cost-reduction actions will be taken in North America and Europe before the end of the fiscal year, July 31, 2008.
Outlook Wolseley reports that challenging conditions in many markets are expected to continue, although the U.S. commercial and industrial market, which accounts for the majority of Ferguson's business, is likely to remain stable into the next financial year. The group's focus on cost reduction is to continue.