(RTTNews) - Plumbing and heating products supplier Wolseley plc (WOS.L: News ) on Wednesday said pre-tax profit from continuing operations before items for the first quarter declined 45% from the year-ago period and group revenue dropped 13% from last year. Citing challenging market conditions, the company said gross margin was down and the pricing pressure might continue.

In a trading update for the quarter ended October 31, the company said it expects market conditions to remain challenging, particularly in the Industrial and Commercial segment.

While announcing fiscal 2009 results recently, Wolseley said that in the short term, market conditions would remain challenging due to tight credit conditions, high levels of foreclosures and rising unemployment rates. The company said today that market trends and trading performance for the quarter remain in line with management expectations set out in September. Overall, the like-for-like sales trends in the first quarter were more favorable than the fourth quarter of the prior year, the plumbers' merchant noted.

Profit from continuing operations before tax, exceptional items and amortisation and impairment of acquired intangibles for the quarter dropped 45% from last year to GBP 76 million. The decline was 50% in constant currency.

Group revenue in the three months ended October 31, was GBP 3.395 billion, down 13% from the corresponding period in the prior year. Trading profit was down by 41% to GBP104 million, reflecting lower profitability in the Ferguson business due to the further decline in the Commercial and Industrial market. On a constant currency basis, revenue declined by 20% and trading profit was 46% lower than the corresponding period in the prior year. Underlying trading profit was down 28% for the latest quarter.
However, majority of the Group's business units maintained or improved their market share in the quarter. The overall gross margin was 50 basis points down from the prior year and the company expects the pricing pressure to continue.

In North America, revenue for the quarter was down 17% in sterling, while trading profit was down by around 44%, reflecting lower profitability in Ferguson and the one off property profit in the prior year. On a constant currency basis, revenue and trading profit were around 24% and 49% respectively, down from the prior year.

During the quarter, Ferguson witnessed a further decline in the Commercial and Industrial market due to continued shortage of funds for project financing. Revenue in local currency for the quarter was down around 26% and underlying trading profit excluding property profits for the quarter was down around 47%.

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