Wolseley profit falls as European market softening

By Marc Roca

LONDON (Reuters) - Building materials distributor Wolseley (WOS.L) reported a 30 percent fall in nine-month profit in line with its first-half performance, but said on Wednesday UK markets had slowed sharply in recent weeks.

The world's biggest distributor of plumbing and heating materials, which has been hit hard by a general economic downturn and a weak U.S. housing market in particular, said it would cut a further 70 million pounds ($98 million) of costs.

"Challenging conditions in many markets are likely to persist ... although the U.S. commercial and industrial market is likely to remain stable into the next financial year," Finance Director Steve Webster told reporters.

U.S. housing and repairs, maintenance and improvement (RMI) markets continued to soften, and trading had worsened in many European markets, the company said, adding that there had been a "more pronounced slowdown" in the UK over recent weeks.

Wolseley shares have fallen almost two-thirds in 12 months, hit by a downturn in the U.S. housing market and prompting fears over its finances.

Credit information firm Experian (EXPN.L) also unveiled a cost-cutting drive on Wednesday as companies across industries try to cope with an economic downturn.

Wolseley has underperformed the UK construction and materials sector .FTASX2350 by 42 percent over the past year, amid concerns over its exposure to the U.S. housing market. The group earns half of its revenues in North America.

"We continue to expect the U.S. housing market to get worse before it gets better," Webster said. "Foreclosures there are 65 percent up year-on-year, which continues to cause problems."