Builders and plumbers merchant group Wolseley sustained a pre-tax loss of £766m for the financial year ending July 31, it was announced today.
Much of that has been blamed on goodwill write-downs and heavy restructuring costs, relating to the 10,000 jobs axed since 2006.
Turnover fell 2.5% to £14.4bn, though the £1bn rights issue reduced debt by £1.5bn to £959m.
Ian Meakins, who succeeded Chip Hornsby as chief executive in June, said: “Our final results reflect the harsh impact of the economic downturn on the construction industry and consequently Wolseley’s business. Overall, we remain cautious as to the outlook for our markets in financial year 2010, although profit trends in the second half are expected to improve.”
In the UK and Ireland, Wolseley UK, which accounts for 18.7% of group revenue, saw turnover fall 15.8% to £2.7bn, with trading profit plummeting 69% from £176m to £55m. Competitive pressures meant gross margins came under severe pressure with the result that the trading margin fell from 5.5% to 2%.
Plumb and Parts Center, however, performed strongly despite the challenging markets with the Lightside businesses achieving an overall trading margin of 6.0%.
The Commercial and Industrial business saw a significant softening during the second half and is expected to continue to decline during 2010.
The Heavyside building materials brands, mainly Build Center, continued to be affected by the rapid deterioration in new residential construction in the UK. The company has, therefore, closed around 78 Build center branches this year, with the intention of focussing fewer, more profitable locations.
The Irish construction market remains severely depressed with activity levels down by 70% and further economic uncertainties affecting the RMI market. Overall Wolseley employee numbers Ireland are now 47% lower than early in 2007.
Action taken in the UK and Ireland will save around £160m a year and includes reducing headcount by 3,083 and closing 284 branches as well as the Didcot, Chorley, Henfield and Ripon distribution centres.
Wolseley UK now has 1,643 branches, compared with 1,927 this time last year.