Falling housing markets hit builders' providers

Falling housing starts have hit trading profits at builders' merchants Wolseley, the company said yesterday. Barry O'Halloranreports.

The British-based group, which owns builders' suppliers, Brooks, Heat Merchants, and Tubs and Tiles in the Republic, said at its annual general meeting that there had been a fall in trading profits in its Irish business in the three months ended October 31st.

The group blamed a 30 per cent drop in new housebuilding over the same period last year for the performance. However, it told shareholders in an interim management statement that revenues in both Ireland and Britain were up by "around 5 per cent" over the three-month period.

The group said trading profits in North America were down 30 per cent as the US housing slump hit home. Wolseley plans to cut 1,700 jobs in the US and shut branches and depots. Up to 1,300 jobs will go in the current quarter.

About half of Wolseley's sales come from North America and it has invested $1 billion on acquisitions there over the last two years. These contributed about $30 million to revenue growth.

Chief executive Chip Hornsby signalled yesterday that the group expected a tough year ahead. "Looking out over the next 12 months, the US is going to be very challenging," he said. "Sales trends in both North America and Europe have been difficult to interpret and have not been consistent from month to month."

The group also said the negative impact of what had been happening in North America is beginning to be felt in Europe.

It said that there was evidence that the British housing market was slowing, although demand continued to outstrip supply. Spending on home repair, maintenance and improvement was also weakening.

Its French business improved its performance, the group said.