Wolseley, the world's largest supplier of heating and plumbing equipment, today warned that its struggles were far from over as it announced weak quarterly sales and a drop in underlying profits of 45 per cent in the three months to the end of October.

The company has been badly affected by the recession and the downturn in the housing market and said market conditions remained extremely challenging.

Revenue dropped 13 per cent to £3.4 billion in the last quarter and the company reported a £766 million pre-tax loss for the 12 months to July 31 this year, after posting a £399 million profit a year previously.

Wolseley was forced to cut more than 10,000 jobs last year as part of measures to stem escalating losses. Chief executive Chip Hornsby also stepped down in July.

Net debt for the last quarter was £1.22 billion up from £959 million at the end of July.

The FTSE 100 company, which appealed to shareholders for £1 billion earlier this year, said market conditions in the industrial and commercial sectors were continuing to weigh heavily on the group, and added that today's results were in line with the management's pessimistic expectations outlined in September.

Chief executive Ian Meakins said: "The overall trading environment continues to be extremely tough and we remain firmly focused on driving operational performance.

"We will continue to focus on delivering improved service to our customers, protecting share and gross margin, driving further cost reductions and delivering a good cash performance."

In an interim management statement issued this morning, the company said it expected debt to be lower by the end of February, and to have decreased further by next July's final results.

In Europe, revenue for the quarter was down 10 per cent compared to the previous year, while trading profit was down by 23 per cent. In North America, revenue was down by 17 per cent.

In this morning's statement, Wolseley said it expects the new residential and RMI markets to move towards stabilisation, but considered that the majority of the group's commercial and industrial markets are "likely to deteriorate further" in the short term.

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