Wolseley, the building materials group, added to the gloom surrounding the US housing market this morning as it reported a 23 per cent drop in trading profit and warned that business in the US would become more challenging.

The company reported first-half trading profits of £300 million, which failed to meet analysts’ expectations, as its US building materials operation, Stock, swung to a loss of £44 million, hit by the collapsing housing market.

Wolseley management said in a statement: “The board expects business conditions in a number of the group’s markets to become more challenging. In the US, the housing market is likely to deteriorate further and put additional pressure on the RMI (repair, maintenance and improvement) market.”

Wolseley, which slashed 6,000 jobs in its last financial year and recently cut a further 3,000 to combat a tough US housing market, said its focus will remain on further cost reductions and maximising cashflow.

Shares in the group have fallen 42 per cent over the past six months and closed on Friday at 532p valuing the group at £3.5 billion.

However, the group raised the interim dividend by 3.7 per cent to 11.25p, saying the decision was to reflect its confidence in the firm’s longer term growth prospects.

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