Heywood warns on profits as U.S. business slumps

LONDON (Reuters) - Building products maker Heywood Williams Group HYWD.L warned on Tuesday that 2008 profit would be significantly below market expectations after the credit crunch hurt business in its main U.S. and European housing markets.

"Trading conditions are very tough," Heywood said. "All of the housing markets the group serves have declined sharply during 2008 compared with 2007."

This has had a material impact on group performance, with the firm now expecting its outcome for the full year to be "significantly below current market expectations," it said in a statement.

About 80 percent of Heywood sales are building products aimed at customers in residential home-improvement and residential new building in Europe and North America.

Companies that rely on the construction and housing markets have reported drastically falling business as global banks tightened lending conditions in the global credit crunch.

"The normal seasonal increase in demand has not occurred in any of the markets in which the Group operates," Heywood added.

"This is solely due to the unprecedented impact of the credit crunch on the availability and cost of mortgages for consumers in both North America and across Europe."

New building is typically down as much as 50 percent while home-improvement activity is down as much as 25 percent for the year in those markets, the company said.

Heywood, valued at around 12 million pounds, said it is trying to maintain margins and reduce costs, adding that it has cut 135 employees.

(Reporting by Hsu Chuang Khoo; Editing by Quentin Bryar)