Friday, British plumbing and heating supplies company Wolseley Plc (WOS.L) confirmed its plan to raise about GBP 1 billion to recapitalise its business, and cancelled its interim dividend payment, after it reported a hefty loss hurt by housing market slowdown and price deflation. Shares of Wolseley were down more than 11% following the news.
The company noted that it would raise GBP 781 million in 11 for 5 rights issue and GBP 270 million firm placing at 120 pence per share. Wolseley would use the net proceeds of about GBP 1 billion to reduce net debt of about GBP 2.5 billion.
Wolseley's loss attributable to equity shareholders was GBP 777 million or 118.37 pence per share, compared to a profit of GBP 65 million or 9.86 pence per share in the year-ago period.
Loss before exceptional items totaled GBP 604 million, compared to a profit of GBP 77 million in the same period of last year. On a per share basis, earnings before exceptional items and the amortization and impairment of acquired intangibles amounted to 10.93 pence, compared to 28.35 pence in the prior period.
Trading profit was GBP 182 million for the half-year ended January 31, 2009, down 42.7%, compared to GBP 318 million in the corresponding period of last year. The the decline was primarily due to the trading loss at Stock, the US Building Materials business.
Year-to-date revenues advanced 3.2% to GBP 8.28 billion from the previous year's revenue of GBP 8.03 billion.
The company stated that it overall performance is adversely affected by the continued meltdown of the US residential housing market, price deflation in lumber, worsening consumer sentiment arising from global credit restrictions and the consequential weakening of the UK and European construction markets for building materials.
The company's North American division generated revenue of GPB 4.23 billion, up 6.5% from GBP 3.97 billion last year. Half-year revenue from US Plumbing and Heating operations totaled $3.04 billion, up from the previous year's $2.75 billion, while Stock's revenue decreased to $826 million from GBP 889 million prior year.
Revenue from the European operations edged down 0.1% to GBP 4.051 billion from GBP 4.056 billion, predominantly driven by an organic revenue decline of 11.1%. Wolseley UK and Ireland reported a 12.5% drop in revenue to GBP 1.40 billion from GBP 1.60 billion in the previous year.
Wolseley, grappling with adverse market conditions, said it would not pay interim dividend. Further, to withstand the deteriorating economy, the company has decided to reduce both costs and debt. The Group's net debt position was sternly affected by the recent weakness of sterling against the euro and the US dollar.
In light of the severe global macroeconomic crisis and the current uncertain outlook for the Group's business, the debt-laden firm decided to strengthen its capital base through an issue of equity by way of a share issue, comprising a fully underwritten firm placing and a rights issue, in order to raise in aggregate about GBP 1 billion - net of expenses.
The firm placing is at a price per existing share of 120 pence per share at a 27% discount to the closing price of 165 pence per share on March 5, 2009. Deutsche Bank and UBS are acting as joint corporate brokers and joint sponsors of the share issue while RBS Hoare Govett and BNP Paribas are acting as joint bookrunners. Rothschild is acting as financial adviser to Wolseley.
Additionally, the company has arranged a new EUR 1 billion multi currency committed 2 year forward start debt facility to be provided by 5 core relationship banks from August 1, 2011 subject to completion of the share issue.
Wolseley also announced a clear strategic focus on its core businesses of North America Plumbing and Heating, UK and Ireland, Nordic and France. In the Nordic region, the board expects to witness strong growth opportunities to further consolidate DT Group's leading market positions once the market recovers. The company believes that the downturn in the UK, Irish and Nordic economies is likely to be generally more severe than that experienced in the remainder of Continental Europe.
The company has also decided to proceed to dispose of its US Building Materials business, Stock, to conserve cash, reduce losses and strengthen its overall financial position during the current economic downturn. Wolseley expects to conclude the exit process over the next few months.
As part of its restructuring plans taken between August 2007 and January 31 2009, the firm now expects to save about GBP 291 million in the remainder of fiscal 2009, and the expected annualized benefit of all actions initiated to January 31, 2009 is GBP 572 million. The company's cost reduction plans also includes disposing of assets including property, plant and equipment, disposing of 5 non-core businesses for consideration of GBP 26 million, and suspension of acquisitions since February 2008.
The company has slashed workforce of about 17,000 and has closed 713 branches globally since August 1, 2007 to right size the cost base and reduce debt.
Wolseley is currently trading at 146.50 pence, down 18.90p or 11.43%. During the day, WOS.L shares touched a high of 166p and a low of 131.30p. In the past 52-weeks, the stock has been trading between 155.50p and 590p.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.