Wolseley, the plumbing distributor behind Plumbcenter and bathstore.com, is expected to cut hundreds of jobs in the UK this year, as a sharp downturn in the housing market hits demand for new homes and repairs.

The British group, which is the world's largest building and plumbing supplies company through its extensive business interests in North America, yesterday reported a 30 per cent drop in pre-tax profits.

Problems in the United States business began to take their toll last year after a sharp downturn in US housing starts, but now Wolseley has seen a pronounced downturn in the UK in the past six weeks.

Steve Webster, finance director, said that the problems in Britain were because of a lack of available funding for potential buyers and lack of confidence, rather than any fundamental problem in the construction market.

The company refused to say how many UK jobs were likely to be cut, but it expects to give an update on redundancies across Europe in July.

The company said that it had already closed 75 branches of its Ferguson business in North America with the loss of 200 jobs and closed a further 15 sites in Canada. The measures will reduce annual costs by about £70 million, it said.

Wolseley also tried to allay analysts' fears that it might be forced into a rights issue because of its £2.8 billion debt. Since the end of January it has repaid one €500 million (£401 million) loan and has put in place two new debt facilities. It has also said that it will repay its loans with the most restrictive covenants.

Mr Webster said: “I am confident that we will not breach our covenants. A rights issues is not on our radar. There are many things we can do before we have to resort to a rights issue such as cost-cutting, cutting spending and property sales.”

Wolseley has shed about 10,000 jobs worldwide over the past 18 months, trimming its headcount by about a tenth. Most of those losses have taken place in the US, where the group's revenues have been hardest hit by the collapse in new home starts. Last June, the FTSE 100 company cut about 1,000 jobs from its European business. Most went from the UK operation, which employs about 14,000 staff out of a total 37,000 in Europe.

Shares in Wolseley, which makes half its profits in the US, closed down 11p at 525p yesterday.

The company said in an interim management statement that, for the year to April 30, trading profits in the UK were 6 per cent lower, despite a 3per cent increase in revenues. In continental Europe, the softening was also noticeable, with Wolseley France experiencing an 18 per cent fall in trading profit.

Chip Hornsby, the group chief executive, said: “The cost-reduction actions outlined will enable us to restructure the business further, so that we are better positioned for the challenges ahead.”

How it all began

— Wolseley was founded in 1887 in Sydney, Australia, when Frederick York Wolseley, an Irishman, founded the Wolseley Sheep Shearing Machine Company. It made the first mechanical sheep-shearing device. In 1889 Wolseley transferred his patents to a new London-registered company

— In 1982 it entered the American market by acquiring the plumbing distributor Ferguson Enterprises

— It employs about 79,000 people working in 27 countries

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