British plumbing and heating supplies company Wolseley today said half-year profit would be around two-thirds lower than last year and that its debt had widened due to adverse currency movements.
In a trading update for the five months to the end of December, 2008 Wolseley said pretax profit was down around 66 per cent year-on-year and that its net debt had increased 22 per cent to £3 billion ($4.14 billion) since last summer due to recent adverse movements in sterling against the euro.
The company, which has 48 per cent on its debt denominated in euros, said it took a £557 million hit on currency movements during the period but expects to lower its debt position by the half-year due to an expected working capital inflow.
The building supplies group, which has been battered by the downturn in the housing market, said that until conditions stabilise it is unlikely to see any upturn in its markets.
The company, which has slashed 15,000 jobs since mid-2007, said that until consumer confidence returns and availability of finance for customer projects improves, the group expects its performance to decline.
The consensus forecast on Reuters Estimates shows that, on average, analysts expect the company to post a pretax profit of £342 million for the year to the end of July.
Wolseley said year-on-year housing starts for December fell 45 per cent to 550,000 units in the US and that UK sales were around 80 per cent down on the same period last year.
Wolseley was expected to make an announcement regarding a capital raising of around £400 million today but said it would "continue to evaluate all of the options" available to it and focus on cash generation and cost reduction.
"Our attention and efforts remain resolutely focused on achieving compliance with our banking covenants ... we must seek to ensure the business is well positioned to benefit when the markets in which we operate begin to recover," chief executive Chip Hornsby said in a statement.
Reuters