Builders merchant group Wolseley is making swingeing cuts in its US presence, in an attempt to mitigate losses due to the sharp downturn in new housing starts in the States.
Wolseley are to close 86 branches at their US arm Stock Building Supply , leaving them with just 209. They are leaving 16 markets in six states, leaving a presence in 27. This is on top of the 70 closeures made since January 2006.
There had been speculation that the group would sell the entire Stock Building Supply arm but the board has now said that this is “not an appropriate strategy since it would be depriving shareholders of the opportunity to benefit from a market recovery”
US housing starts have fallen 64% from an annual rate of 2.3 million in January 2006 to an annualised 817,000 in September 2008 and the division reported a trading loss of $246 million (£123 million) in the year ended 31 July 2008, on revenues of $3,471 million (£1,735 million), even after earlier job cuts and branch closures.
Wolseley chief executive Chip Hornsby said: “With the on-going decline in US new residential construction, significant over-capacity in the industry and the consequential negative impact that stock is having on the group’s results, it is imperative that we take further action to restructure this business.”
Restructuring costs are likely to be around $225m (£138m).
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