BUILDING supplies giant Wolseley today announced a sharp fall in profits – but said it remained confident of meeting its banking covenants this year.
Faced with a significant worsening in trading conditions, the Build Center and Plumb Center owner reported bottom-line pre-tax profits of £145m for the year to July 31, compared with £634m a year earlier.
The period included £76m of restructuring charges – with 270 branch closures and a 7,100 cut in staff, mainly in North America.
Another 600 jobs have been axed since the start of the new financial year, while property and business disposals of £46m have been realised.
Chief executive Chip Hornsby said the actions taken so far left the group well placed to meet its banking covenants over the year.
The company said: “The board has no plans to raise equity or renegotiate banking covenants, although these remain options should market conditions deteriorate very dramatically.”
Wolseley also axed its final dividend in a move set to conserve £150m of cash. In total, cost savings of £176m a year are expected from the restructuring and other initiatives currently being taken.
Overall job cuts have totalled more than 10,000 in the past two years – 12% of the workforce – with most of them being in the USA.
Group trading profits, which strip out exceptional items, totalled £683m – higher than the £608m forecast in the City, but about 22% lower than a year earlier.
The company has 14,000 staff in the UK and 1,300 staff in Ireland.
