Wolseley is to spend £100m on slashing 800 jobs and closing 80 branches in the UK.
The world’s largest supplier of plumbing and heating products outlined the cutbacks as part of a review of its British operation, which has been hit by tough competition and tepid demand in the property repair, maintenance and improvement market.
Wolseley, which owns brands such as Plumb Center, said the overhaul of its UK business was intended to generate annual cost savings of up £25m-£30m over two to three years once complete. The division accounts for only 8 per cent of the FTSE 100 group’s trading profit, with the majority coming from its US arm.
John Martin, chief executive, said the objectives were to improve customer service levels, increase availability of materials and generate better returns for shareholders. It will also involve the closure of a distribution centre.
“Regrettably this will result in job losses which we will handle sensitively and minimise through redeployment and attrition as far as possible,” he said.
The announcement came as Wolseley revealed a windfall from the weaker pound. Trading profits increased 7 per cent to a record £917m in the year ended July 31, mostly down to the lower exchange rate, while revenue was up 8.5 per cent to £14.4bn, half of which was due to currency effects. Fewer one-off costs saw a 43 per cent jump in pre-tax profit to £727m.
However, Mr Martin offered a sober outlook: “Demand across our markets remains mixed, with some uncertainty in the economic outlook.”
Shares in Wolseley fell by 1.3 per cent on Tuesday to £42.44
Analysts at Liberum called the results “a little disappointing” and flagged that management had warned of a slow start in the current financial year.
“However, the announced UK restructuring is welcome, and should generate good returns once complete,” they added.
Brokerage Davy said Wolseley’s US arm continued to perform strongly “despite a somewhat challenging backdrop”. Sales were up 4.5 per cent since August, compared with 1.5 per cent across the whole group, an indication of the tough conditions in other markets.
Wolseley already booked £10m of restructuring charges related to its UK business last year. Of the additional £100m, some £70m is expected to be in cash. A further £40m will be invested in refurbishing its outlets in the UK and other areas such as technology and digital tools.
The group proposed a full-year dividend of 100p, an increase of 10.2 per cent on last year. Basic earnings per share were 256.4p.
