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No Recovery In Us Housing

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No recovery in US housing, Wolseley warns

By Ben Bland, Online City Reporter

Last Updated: 8:48am BST 16/07/2007

Wolseley, the specialist plumbing and building materials supplier, warned this morning that "there are no sign of any upturn in the US housing market" as profits at its North American business tumbled by 17pc.

Around a quarter of Wolseley's revenue comes from selling supplies in the US new homes market, which has "slowed significantly", according to the company.

Chip Hornsby, chief executive of Wolseley, said: "The group has reacted swiftly and decisively to the difficult conditions in the US housing market and will continue to pursue its strategy to create competitive advantage and shareholder value from its leading market positions and excellent platform for future growth."

Updating the market on trading in the 11 months to June, Wolseley said that overall group profits were 2pc higher than last year thanks to a good performance in Europe, which was boosted by the acquisition of DT Group, Scandinavia's biggest supplier of building materials, for €1.98bn (£1.34bn) in September 2006.

Including the contribution from DT, European revenues rose by 45pc, with profits up by 35pc. But Wolseley's existing European business grew less spectacularly, with revenues up by 15pc and profits up by 5pc.

The company said: "In the UK, recent sales trends have been positive although the market signals are difficult to interpret following the recent interest rate rises. Housing starts in Ireland are expected to continue to slow from the extremely high levels seen in recent years."

Wolseley has been restructuring its business to reduce costs and investing in acquisitions in order to insulate itself against any further weakening in the US housing market.

In addition to the takeover of DT, Wolseley made 41 bolt-on acquisitions that costs £374m between them and are expected to bring in £656m of extra revenue in their first full year.

While emphasising that "the timing of any recovery remains uncertain", Wolseley said that it is "well positioned to benefit from any recovery in the US new housing market and expects to continue to make good progress in other markets which account for around three-quarters of the group's revenue."

Analysts at Citigroup said: "Profit was negatively impacted by weak US housing as expected - but the group is reacting well." - great to hear, let's buy more stocks in Wolseley!! :lol:

A few months ago, Woseley also axed 4,000 jobs http://www.telegraph.co.uk/money/main.jhtm...23/cnwols23.xml - gulp!

Edited by studdymx

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