US housing woes dent Wolseley's profits

British construction materials group Wolseley reported its first fall in profits in more than a decade yesterday on the back of ongoing weakness in the US housing market.

The group, which owns builders' suppliers, Brooks, Heat Merchants, and Tubs and Tiles in the Republic, said yesterday that government spending on schools, hospitals and social housing boosted British and Irish revenues for the 12 months to the end of July by 18 per cent to £3.17 billion (€4.55 billion).

But it also noted that there had been a sharp fall in the number of new housing starts in Ireland.

Group profits before tax fell 18 per cent to £634 million during the same period as a result of a weak US house-building market, which has been worsened by the sup-prime crisis. Turnover was up 16 per cent at £16.2 billion.

Analysts said yesterday that group profits were below expectations but agreed that the results were not surprising in light of US market conditions.

Chip Hornsby, Wolseley chief executive, said there were no indications of any recovery in the US housing market and warned the repair and maintenance market there was now declining as well.

Some observers suggested that the results have ramifications for Wolseley's bigger Irish rival CRH, which depends on the US for roughly half its revenues.

The Irish group is close to buying a series of operations from Mexican giant, Cemex, that will see it draw close to 60 per cent of its revenues from the US.

However, the group has pointed out that only about 15 per cent of its US business depends on the residential market there.

Analysts say 40 per cent of CRH's business there is supplying highway construction and other infrastructure, underpinned by state and federal spending.- (Additional reporting: Financial Times service)