Wolseley hit by weak Europe trading

The group, which has an office in Ripon, North Yorkshire, and which trades under the Plumb Center, Pipe Center and Drain Center brands in the UK, has cut almost 1,000 staff from its European workforce over the past seven months, including 234 in the UK.

The firm is battling weakness in France, Denmark, Sweden, Finland and Norway and said housing markets deteriorated “sharply” in the six months to January.

Wolseley’s half-year earnings were dented by £87 million of exceptional costs, with £63 million of these stemming from France, and £10 million from redundancies.

It expects another £70 million to £80 million of charges in the second half, and is selling or closing more than 110 building materials branches in France.

Underlying group sales increased 2.2% across the group to £6.3 billion versus a year earlier. But exceptional charges dragged pre-tax profits to £199 million from £250 million in 2012.

Trading profits - booked before exceptionals - grew 7.6% to £324 million.

Wolseley posted flat sales in a declining UK market, where it generates 14% of its business.

Like-for-like sales surged 8.3% in its biggest market of the United States.

But Wolseley reported steep underlying sales falls in France and its Nordic markets, where they declined 10.4% and 6.2% respectively.

Chief executive Ian Meakins said: “We faced substantial headwinds in Europe, and are taking appropriate actions to protect profitability.”

He expects trading in the UK to remain flat and “very weak” in Europe, where it will maintain tight control of costs.

It completed four acquisitions during the half for a total £120 million, including buying 22 Burdens drainage supplies depots in the UK. It plans to cut 200 jobs from the Burdens business, almost a third of its workforce.

Wolseley’s net debt grew to £871 million from £470 million a year ago after paying out £462 million in dividends.

It plans to increase its half-year dividend by 10% to 22p per share.

Wolseley’s shares were down 2%.

Brokerage Panmure Gordon said: “After a strong performance we continue to advocate taking profit.”