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Wolseley UK gets rid of 2,000 jobs

Plumbing and building materials supplier Wolseley is to get rid of 2,000 jobs in the UK and Ireland and close or consolidate more than 200 branches.
Wolseley UK announced today this further cost-cutting move will cut annualised costs by £80 million.

Across Europe, 2,300 jobs will go.

A company spokesman said 'In the coming weeks the management team of the UK divisions will be determining the impact on businesses in these areas and consulting with those affected. We have no information as yet on which UK branches will be affected'.

In anticipation of further market decline, the restructuring will be phased over the next few months and when completed is expected to incur exceptional restructuring charges of £45 million, generate annual savings of £103 million.

The world's largest specialist trade distributor of plumbing and heating products owns the Plumb Center and Build Center chains and its Europe and North America operations has been hard-hit by the housing downturn in the US and the UK.

Wolseley, said in its interim management statement published on November 18, 'For the three months ended 31 October 2008, the group's results continued to be affected by the unprecedented events in the financial markets and their wide ranging impact on the housing market and consumer sentiment. As expected, these factors have caused a further deterioration in the trading environment since September, particularly in the UK and Nordic regions'.

The company said revenue for the UK and Ireland decreased by 10% with trading profit down by 65%.

Trading patterns were mixed across the three UK segments. The heavyside building materials brands, such as Build Center and Brooks (Ireland), continued to be affected by the rapid deterioration in new residential construction. This was particularly true in Ireland, where housing starts were down by more than 60% on the equivalent quarter of the previous year.

Across the lightside plumbing and heating brands, Bathstore, which is geared to consumer markets, reported a significant deterioration in revenue in the first quarter.

The company said Plumb Center continues to show its resilience, with more than two thirds of revenues relating to the residential RMI market and, in particular, the heating segment which remains relatively robust. The commercial and industrial business continues to hold up well.

Chip Hornsby, group chief executive of Wolseley, said 'While these results reflect a further deterioration in the business environment in the first quarter it was not unexpected, and, we continue to react swiftly to market conditions with aggressive but measured cost reduction. In these unprecedented circumstances, the key priorities remain driving cost reduction and enhancing cash flow to ensure the group remains compliant with its banking covenants.'

Wolseley, has already cut 5,000 posts worldwide since August. Wolseley UK and Ireland has more than 1,900 branches and 13,500 employees. Wolseley has 400,000 product lines supplied through the specialist brands: Plumb Center, Build Center, Drain Center, Pipe Center, Hire Center, Climate Center, Parts Center and Electric Center.
18 November 2008

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