Wosleley gave warning yesterday that the housing slump in the United States is to continue as the FTSE 100 building materials supplier revealed its first fall in profits for 15 years.

Chip Hornsby, its chief executive, said that the group may be forced to shed more US jobs as he announced a 17.6 per cent slide in group pretax profits to £634 million.

Trading profits at Stock, its American building materials supply division, slid 74.9 per cent to $86 million (£42 million) over the 12 months to the end of July. Wolseley has cut 3,500 jobs from Stock, equivalent to 20 per cent of the division’s workforce, since last November.

The drop in profits comes as house prices are sliding across America as the crisis in the sub-prime mortgage market has triggered a wave of repossessions and forced sales.

Mr Hornsby said that the repair and maintenance market was now “softening”. He said that he would be keeping a close eye on the performance of the company’s more than 100 Ferguson plumbing and heating showrooms in America over the coming months and may cut jobs.

Wolseley has cut 1,000 jobs from Ferguson since last winter, equivalent to 5 per cent of its workforce. Annual revenues from the Ferguson division rose 14.8 per cent to over $11 billion.

Mr Hornsby said yesterday: “A prime area of concern is the high-end house remodelling business. After what has happened in the financial markets over the past 60 days, will that spook people to say: ‘We will hold off [on spending]?’ Those showrooms, will they stay busy? If you can get you and your wife into the showroom saying you need $10,000 [worth] of work we could sell $50,000 . . . We have seen a little bit of footfall being down. We anticipate it could be worse.”

About 23 per cent of Ferguson’s sales derive from the new homes market, which has been in the doldrums for nearly a year. Another 16 per cent relates to domestic repairs and maintenance, while the balance derives from the commercial market, which remains robust.

“Ferguson’s workforce made an adjustment of 1,000 last winter. There has been no adjustment since and we may adjust depending on September and October trading,” Mr Hornsby said. Wolseley’s European business, meanwhile, is buoyant, with no signs of significant falls in demand from the housing market for its products. The commercial market is in rude health. Like-for-like sales rose 8.8 per cent. Acquisitions helped to boost European revenue by 46.8 per cent to nearly £7.6 billion, driving up group revenues 14.6 per cent to £16.2 billion.

The company has boosted its cashflow to £1.3 billion from £800 million a year ago. The American business dragged on group margins, down to 5.4 per cent from 6.2 per cent a year ago, but Mr Hornsby said that he was sticking to a target made this March to raise trading margins to 7 per cent by 2011.

The total dividend payout is up 10.2 per cent to 32.4p. Steve Webster, the finance director, said that the company was on track for a similar rise next time round.

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