Wolseley braced for tough times

Wolseley has warned 'extremely challenging' conditions are set to linger until early next year

Heating and plumbing giant Wolseley has warned "extremely challenging" conditions are set to linger until early next year as profits tumbled by nearly 90%.

The Plumb Centre and Build Centre firm has been hit by housing slumps on both sides of the Atlantic, but is now faced with weakening commercial and industrial markets as the recession bites.

The group's pre-tax profits for the nine months to April 30 have fallen 88% to £72 million and sales are down 15% in constant currency terms.

Chief executive Chip Hornsby said: "Recent trading has proved extremely challenging and we continue to anticipate this will be the case until at least early 2010."

Wolseley has cut more than 13,700 jobs since August last year to slash costs in the bleak conditions, of which around 2,819 have come in the UK and Ireland.

Its latest UK cuts involve the closure of distribution centres at Ripon, Chorley, Henfield and Didcot, costing 270 jobs.

Wolseley shored up its finances with a £1 billion fundraising in March, which helped reduce net debt to £1.53 billion.

It has also found a joint venture partner for its US building materials arm, in which it retains a 49% stake.

Mr Hornsby hopes these moves will put the group on a firmer footing to benefit from an eventual recovery - as well as gaining from a return to health of the US operation - but meanwhile conditions remain bleak.

All of its European operations have seen declining activity in the three months to the end of April, but the UK and Ireland and Nordic markets have been particularly hard hit.