Wolseley, the building materials company, was criticised by investors and analysts yesterday after announcing an 80 per cent fall in profits to £72 million.

One leading institutional investor told The Times it was “concerned” that the builders' merchant would continue to struggle during the recession and possibly lose market share. In March, the company went cap-in-hand to shareholders for £1 billion to avoid breaching its banking covenants over its debts of £2.5 billion. The figure has now been reduced to a more manageable £1.5 billion.

“The markets they are in are tough at the moment, there's no doubt, but management could have acted sooner, especially on the rights issue,” the investor said.

Chip Hornsby, chief executive of Wolseley, had few words of comfort for investors. He said: “There are no signs of improvement in the near future.”

He also hinted at more job losses over the next year, although Wolseley has already fired almost 20,900 people, including 3,269 employees in Britain, since the credit crunch started in 2007.

About 3,500 Wolseley employees lost their jobs in the three months between February and April 30, with more than 1,000 going at Ferguson, its American plumbing supplies operation, and 330 in the UK.

“We will continue to adjust our expenditure related to revenue and we will have positioned ourselves to take advantage of the upside in future, when the market stabilises,” Mr Hornsby added.

Sales are still declining in all the company's markets, with revenue in America falling by 15 per cent in the nine months to April 30.

Mr Hornsby said of the American market: “There's an enormous amount of property entering the market through foreclosures. We're not expecting it to correct until 2010 and we're still waiting for the stimulus packages to kick in.”

He added that, while the rate of decline had slowed in Britain, signs were still not encouraging.

Trading profits fell by 70 per cent in the UK and Ireland while revenue fell by 15 per cent. In France, where the housing market has been more resilient than in Britain, revenue was down by 10 per cent and trading profits by 70 per cent.

Analysts at Citigroup said that full-year sales could be 10 per cent lower than previously forecast.

At Numis, analysts cut their estimates for Wolseley's 2009 and 2010 profit before tax by 24 per cent — but rated the company a “buy”.

Wolseley's share price fell 18 per cent to £10.05 on Thursday as traders feared the company was in worse trouble than previously thought.

As the housing market slows dramatically in the North American and European markets, which make up most of Wolseley's business, demand for its building and plumbing materials has fallen too. The decline in commercial and industrial property values has started to have an impact on the market for construction materials.

This month, Wolseley disposed of a majority stake in Stock, its loss-making American business, through a pre-packaged Chapter 11 bankruptcy.

However, it will keep a 49 per cent stake in the business and provide a £66 million loan to fund Stock after it is controlled by Gores, the American private equity company.

Sanjay Jha, equities analyst at Pali International, the brokerage, said: “The numbers were quite poor. My first impression is that, if you assume the US plumbing business made a profit, it seems to me that they probably made a loss in Europe. They have solved one problem, but they've got another.”

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