LONDON, Sep 24 Building products distributor Wolseley reported its first profit fall in m

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LONDON, Sep 24 (Reuters) Building products distributor Wolseley reported its first profit fall in more than a decade on Monday, and warned that weakness in the U.S. housing market was spilling over into repairs and maintenance.

Shares in the British firm fell 5 percent to three-year lows as some analysts cut their profit forecasts for the current financial year by around 10 percent.

Wolseley, the world's biggest distributor of plumbing and heating products, said profit before tax and goodwill amortisation fell 7.3 percent to 758 million pounds ($1.52 billion) in the year to end-July, slightly below analysts' average forecast of 761.4 million.

Revenue rose 14.6 percent to 16.2 billion pounds, spurred by bolt-on acquisitions and the 1.3 billion pound purchase of Nordic-focused DT Group, which performed ahead of expectations.

''There are no signs yet of any upturn in the U.S. housing market, and the repairs, maintenance and improvement market is now beginning to soften,'' Wolseley said.

It said uncertainty created by the U.S. subprime mortgage crisis hit sales at a number of its businesses and it was too early to say whether these trends would continue.

In North America, where Wolseley generates roughly half of group sales, trading profit fell 19 percent to 487 million pounds, as its building distribution business Stock saw profit tumbling 75 percent, hit by a weak housing market and one-off charges related to 3,500 job cuts and 46 branch closures.

''It's very difficult to determine exactly what's going to happen (in the U.S. housing market),'' Chief Executive Chip Hornby told reporters.

''The most challenging part will be winter months ... It could potentially get worse before it gets better.'' Its Stock division showed a 15 percent fall in volume, as the new housing market, which accounts for 80 percent of the business, suffered increased competition and slowing housing starts.

New housing starts fell to 1.5 million from an average annualised rate of 2.0 million in the previous year, with the August figure deteriorating further to 1.3 million, Wolseley said.

Its U.S. plumbing and heating division, Ferguson, showed solid results, with 5.5 percent organic growth and a record trading margin of 7.2 percent, as commercial and industrial markets were relatively untouched by the mortgage market woes.

DOWNGRADES By 1100 GMT, Wolseley shares, which had fallen 33 percent this year to become the seventh worst performer in the FTSE 100 index, were 3.2 percent lower at 821-1/2 pence, as broker downgrades by Landsbanki, Cazenove and Numis Securities followed.

''Wolseley is a company under pressure on several fronts -- product demand is on the wane in its significant U.S.

marketplace, financing costs have risen on acquisitions, and further pressure is being felt via the decline in the U.S.

dollar,'' Hargreaves Lansdown analyst Keith Bowman said.

In Europe, Wolseley said it expected to make further good progress as it forecast strong construction markets continuing.

Hornby said it was too early to predict the impact on Britain's housing market of mortgage lender Northern Rock, which has been battered by a funding and customer confidence crisis, triggering a run on deposits.

Wolseley, which aims to grow through acquisitions in the highly fragmented 700 billion pound building materials market in Europe and North America, said it would continue to seek bolt-on acquisitions.

The company, which completed 43 deals worth 379 million pounds in the last financial year, expects to add 671 million of revenues in the current year.

Wolseley aims to raise its trading margin to 7 percent by 2011 but its 2006/07 margin fell to 5.4 percent from 6.2 percent.


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