Wolseley posts £766m loss

Builders merchant Wolseley has reported a £766m pre-tax loss for the year ending 31 July 2009, after posting a £399m profit 12 months ago.

The loss relates to restructuring and redundancy costs. The company has been forced to axe more than 10,000 jobs over the past year.

Revenue was down 2.5% at £14.4bn for the year to 31 July 2009 (2008 figure: £14.8bn).

In the UK and Ireland, trading profit dived 69% to £55m (£176m) and turnover fell 15.8% from to £2.7bn (£3.2bn).

Wolseley has launched a cost-cutting drive that will eliminate £233 million of overheads by next year and close 653 branches.

In the UK and Ireland, it has closed 284 branches and now has 1,643 outlets (2008 figure: 1,927). The closures resulted in 3,083 redundancies.

The company's chief executive Chip Hornsby departed in July.

His replacement, Ian Meakins, said that short-term trading conditions would remain challenging due to tight credit conditions, higher levels of foreclosures and rising unemployment.

He warned that construction activity in the commercial and industrial sectors was still in a period of "accelerating decline".

Meakins added: "The residential sector is seeing a flattening out but where we are still seeing a decline is in the industrial and commercial sectors, particularly in the United States and as a result we will see our overall market continue to decline in the coming year."

Wolseley said that no final dividend would be paid after it raised £1 billion from shareholders in a rights issue in April.

However, this has enabled the company to reduce its debt from £2.5bn last year to £959m, putting it well within its banking covenants.

Meakins said that he wanted to concentrate resources on the company's four core geographical divisions: the UK, US, Nordic region and France.

He added: "Cost reductions will be less than they were in the past because we are conscious that we want to exit this recession with staff in place to take advantage of growth."