NEWPORT NEWS, Va. - Wolseley plc issued its Interim Management Statement for the third quarter announcing the closing of 75 Ferguson branches in the United States, reducing staff by approximately 200 employees. Ferguson is also consolidating 15 locations in Canada, further reducing its staff by approximately another 50 people. According to the distributor, further cost reduction and business improvement actions will be taken in North America and Europe before July 31 of this year.

The company is continuing its rigorous focus on cost reduction and cash flow enhancement looking for further improvements in working capital ratios. According to Wolseley, the U.S. housing and repairs, maintenance and improvement markets have continued to soften, but U.S. commercial and industrial markets have held up well.

“Given the continuing tough market conditions, our response has been to take further action to lower the cost base and improve cash flow, while continuing to pursue our longer term strategic aims,” said Chip Hornsby, group chief executive of Wolseley. “The cost reduction actions outlined today will enable us to restructure the business further, so that we are better positioned for the challenges ahead.”

Despite the closures, overall group revenue was up 2 percent. Ferguson in North America continued to gain market share and for the nine months ended April 30, it had achieved local currency revenue growth of 1 percent due to acquisitions.

Stock Building Supply continued to be affected by the U.S. housing slow-down and saw revenue fall 25 percent with additional pressure on gross margins. The trading loss for the nine-month period was $158 million.

Wolseley Canada achieved 2 percent constant currency revenue growth, although trading profit was 15 percent lower, due to the previously announced one-off branch closure costs.

According to the company, although the U.S. commercial and industrial market, which accounts for the majority of Ferguson’s business, is likely to remain stable into the next financial year, the group’s rigorous focus on cost reduction and cash maximization will continue.

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Publication date:06/09/2008