LONDON, Sept 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 more than 3 percent in early trade, 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 (RMI) 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 said, however, that most of its businesses outperformed their markets, with Stock's 15 percent volume decline beating the market, which had seen a 25 percent fall.
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, with commercial and industrial markets relatively untouched by the mortgage market woes.
DOWNGRADES By 0730 GMT, shares in Wolseley, which have lagged the UK support services sector index by about 30 percent this year, had fallen 3 percent to 823-1/2 pence.
According to Reuters Estimates, analysts were expecting pretax profit of 861 million pounds in the year to end-July 2008, but some said they would now revise those figures.
''The prospects statement is cautious ... We are anticipating downgrading our numbers by around 10 percent, suggesting flat earnings growth in the current year,'' Landsbanki analyst Nick Spoliar said.
Cazenove analysts also said they were now planning to cut their 2007/08 earnings per share forecast by 10 percent.
In Europe the company said it expected to make further good progress as it forecasts strong construction markets continuing.
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.
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