More restructuring after UK£ 965 million Wolseley loss

Wolseley has announced plans to sell or shut one of its US subsidiaries, Stock Building Supply, following group half-year losses of UK£ 965 million (€ 1,08 billion). It also plans a UK£ 1 billion (€ 1,12 billion) rights issue and has negotiated another € 1 billion of credit from its main banks.

Wolseley, the world's biggest builder's merchant, announced revenues of UK£ 8,28 billion (€ 9.27 billion) for the half-year ending on 31 January, a +3,2% improvement on last year.

However, its operating profit fell -43% to UK£ 182 million (€ 204 million). On top of this there was a UK£ 262 million (€ 293 million) restructuring cost and UK£ 800 million (€ 896 million) impairment charge, for a pre-tax loss of -UK£ 965 million (€ 1,08 billion).

The company has announced a financial restructuring package to strengthen its balance sheet. This includes issuing enough new shares to net it UK£ 1 billion (€ 1,12 billion) and adding another € 1 billion to its credit facilities.

Wolseley says that with the new banking agreement in place it has debt facilities totalling UK£ 4,3 billion (€ 4,8 billion), providing UK£ 1,6 billion (€ 1,8 billion) of ‘headroom'.

Wolseley chief executive Chris Hornsby said, "Our markets have been hit hard in recent months and in response we have continued to take prompt and decisive action to reduce both costs and debt.

"In addition, the clear focus on those core market where Wolseley has built leading positions will enable the Group to maintain investment in our key most profitable markets and remain strongly position to capitalise on future market recovery."

Disposal

While Wolseley plans to stay in the US plumbing and heating markets, it has announced plans to exit its Stock Building Supply subsidiary, which focuses on the residential building market.

The Board favours a partial sale to a third party to form a joint venture, and says it has received several expressions of interest. It has set a deadline of 1 August this year to find a buyer, and says it will close the business if it cannot sell all or part of it.