Wolseley continues to be hit by housing market downturn

| September 28, 2009 | 0 Comments
Wolseley continues to be hit by housing market downturn

Wolseley, which is the world’s largest supplier of plumbing and heating equipment, has today posted an annual loss due to the ongoing problems in the housing market.

The company, which owns Plumb Center and Build Center in the UK, slumped to a pre-tax loss of £766 million for the year to 31 July, compared with a profit of £399 million in the same period a year ago.

As a result of the continuing woes within the property market, the company has embarked on a major cost-cutting exercise that will see it close more than 650 branches.

The construction industry has been one of the hardest hit by the recession and in May, the company said it had reduced headcount by 14,000 in order to slash costs.

The group said: “Market conditions will remain challenging driven by tight credit conditions, high levels of foreclosures and rising unemployment.”

Ian Meakins, newly-appointed chief executive of Wolseley, said: “Our final results reflect the harsh impact of the economic downturn on the construction industry and consequently Wolseley’s business.”

In light of the problems, the company raised £1 billion from shareholders in April by issuing new shares in a rights issue.

Meanwhile, last week housebuilder Barratt Developments confirmed it is to raise £720.5 million through a placing and rights issue in order to strengthen its balance sheet and slash debt.

Barratt, which sells 1,000 houses a month and has a debt mountain of £1.3 billion, has been struggling amid the housing downturn.

Last year, headcount at Barratt was reduced by 29% as a result of falling sales due to falling house prices and the tightening of mortgage criteria.

Many housebuilders are still fearful of the lack of mortgage availability and believe it still continues to have an impact on the recovery of the UK property market.

Fellow housebuilders Galliford Try, Bovis, Bellway and Berkeley have all taken action this year to raise cash from investors.

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