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Wolseley takes profit hit from US housing market

Wolseley, the world's biggest distributor of plumbing and heating products, saw its profit before tax fall 7.3% to £758m in the year to July end.
Wolseley takes profit hit from US housing market
Today, Wolseley published its preliminary results for the year ended July 31 2007 and reported its first profit fall in more than ten years. The group admitted the US housing market crisis had affected business sectors such as repair and maintenance in North America but its European operations looked in good shape.

In North America, where Wolseley generates roughly half of its sales, trading profit fell 19% to £487m. Wolseley said: 'Recent events relating to the subprime market in the USA and the subsequent concerns over liquidity in global financial markets have created uncertainty which is reflected in less favourable recent sales trends for a number of the group's businesses. It is too early to assess whether these trends will continue.

'There are no signs yet of any upturn in the US housing market and the repairs, maintenance and improvement ('RMI') market is now beginning to soften'.

In contrast, Wolseley's trading profit in Europe was up 36.9%. The group said most of the European operations achieved good revenue and profit improvements and the results also benefited from acquisitions which expanded the group's geographic diversity.

'Wolseley UK grew strongly in a market which showed a gradually improving trend over the year, despite rising interest rates'. It said government spending on schools, hospitals and social housing RMI underpinned the construction market.

Wolseley UK and Ireland recorded a 17.9% increase in revenue to £3,171m. Trading profit increased by 5% compared to the previous year, including the benefit from acquisitions. During the year, 59 new locations were added in the UK and Ireland.

Chip Hornsby, Wolseley plc group chief executive said:
'Despite the ongoing difficulties in the US housing market, we have produced a very creditable performance. Europe continues to progress, achieving strong profit improvement and benefiting from acquisitions during the period, whilst in the US we have been fast and decisive in reducing our cost base in reaction to deteriorating market conditions'.
24 September 2007

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