LONDON (Reuters) - The world's largest builders merchant distributor, Wolseley
Wolseley said on Monday it was seeing some signs of stabilisation, but that concerns about the unemployment rate and credit levels clouded the earnings outlook.
The plumbers and builders merchant has been battered by the downturn in key markets, forcing it to cut thousands of jobs and sell off weaker businesses.
In January it sold its entire branch network in Ireland and some outlets in Northern Ireland and on Monday it said it was reviewing 19 of its 41 business units. It hopes to either improve the performances or sell them on.
"Over time, the group's intention is to operate fewer, larger, related businesses in core geographies," it said.
Results from builders this year have been relatively upbeat, despite uncertainty around the upcoming general election, which is expected to hit sales, and the fragile economic outlook.
Across Europe the economic picture remains uncertain, and rising unemployment levels are also forecast to hit the housing market.
Chief Executive Ian Meakins told reporters the group had shown in Ireland it could move quickly to sell assets, however he said it was not a good time to be selling adding the strength of the group's balance sheet meant they were not in a rush.
He also said there was a lot they could do to improve each unit before they considered selling, adding that the group had not yet appointed bankers.
Meakins declined to name the units under review but said the Commercial and Industrial markets had continued to decline, particularly in the United States.
Analysts at Deutsche Bank said there was no single fix for the underperforming businesses but said a thorough assessment by the management of branch by branch profitability and local market positions should yield significant improvements.
Shares in the group, which have been steadily improving after losing 80 percent of their value from mid July, 2007 to the start of 2009, were down 1.7 percent by 9:22 a.m., underperforming a slightly weaker FTSE 100 <.FTSE>.
Seymour Pierce said the results were in line with its forecasts and said they would make no changes to their numbers.
Wolseley posted first-half revenues down 15.1 percent to 6.3 billion pounds, with a trading profit which strips out exceptional items, amortisation and impairments, of 167 million pounds, down 33.5 percent.
It cut distribution and other administration costs by 272 million pounds.
"Looking to the future I think the business has held up pretty well in terms of the gross margin and the cost saves coming through," Meakins said. "Market conditions remain challenging, though we are now seeing stabilisation in many of our markets."
Net debt was cut by 49 million pounds since the start of the financial year, to 910 million pounds.
(Reporting by Kate Holton, Editing by Mark Potter and Louise Heavens)
(c) Reuters 2012. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
