British building products retailer Wolseley reported a 25 per cent fall in five-month trading profit on Monday and warned that a worsening US housing market is spreading to home repairs and improvement and across Europe, sending its shares down 12 per cent.
Wolseley also said profit before tax and exceptional items fell almost a third in the five months to end-December, as its US business was hit by the continuing slowdown in housing starts, falling consumer confidence and a weakening US dollar.
"The board expects business conditions in a number of the group's markets to become more challenging over the next few months," the world's largest distributor of plumbing and heating products said, adding it will continue to cut costs and capital spending.
It warned that continued weakness in the US housing market will spread to the repairs, maintenance and improvement (RMI) market, while its European business has also come under increased pressure, with more signs of further slowdown.
"The (US) housing market is likely to deteriorate further until the current high levels of unsold inventory have declined and the full effects of problems in the sub-prime market have been assimilated," it said.
"These conditions, together with reduced availability of credit, are expected to put further pressure on the RMI market."
Its North America division, which earns half the group's revenues and includes building materials distribution unit Stock and plumbing and heating operation Ferguson, posted a 10 per cent fall in revenue and a 40 per cent tumble in trading profit.
Wolseley defines trading profit as operating profit before the amortisation and impairment of acquired intangibles.
Weak US housing starts, which fell 26 per cent during the period, and increased competition forced the Stock division to swing to a loss of £25 million.