To keep the business on an even keel it has announced that it is raising ВЈ1bn from shareholders, using the funds raised to pay down debt which currently stand at ВЈ2.5bn.
Turnover in the latest interim period was ВЈ8.3bn (figure in the previous comparable period: ВЈ8.0bn)
Wolseley has taken a hard look at the market sectors it operates in. The result is that it is completely pulling out of US building materials (the operation which trades as Stock is up for sale). There are doubts over the future of the push into central and Eastern Europe.
The UK is one of the areas seen as a core business.
Chip Hornsby, chief executive, said: “In the UK, the new residential market has deteriorated since the summer and the RMI market has weakened in response to worsening consumer sentiment and tighter credit conditions.”
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Wolseley UK recorded a 13% decrease in revenue to ВЈ1.4bn (previous figure: ВЈ1.6bn), driven by a 14% organic sales decline.
The overall gross margin was only slightly lower due to price management and continued growth in private label sales, which accounted for 13% of revenues in the six months to 31 January 2009.
Wolseley UK’s trading profit declined by 76% compared with the prior figure, from £85m to £20m, as a result of lower trading volumes and price competition.
As a result, the UK and Ireland trading margin fell from 5.3% to 1.4% with the Irish business moving into loss.
A goodwill impairment of ВЈ88m has been recorded at Wolseley UK in the period, reflecting the deteriorating market outlook.
Previously announced restructuring actions are “on track”. The result will be annualised benefits of £95m and a headcount reduction of 2,500 in the UK.
The Heavyside building materials brands, mainly Build Center and Brooks, continued to be affected by the rapid deterioration in new residential construction in both the UK and Ireland.
The Lightside plumbing and heating brands reported deterioration in the first half while continuing to perform at or above the market. Plumb and Parts Center showed some resilience, with more than two thirds of revenues relating to the residential RMI market and, in particular, the heating segment which remained relatively robust.
The Commercial and Industrial business continues to be more positive with government expenditure on social housing, health and education remaining positive.
During the six-month period, 161 net locations were closed in the UK and Ireland taking the total number of branches for Wolseley UK to 1,766 (31 July 2008: 1,927).
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