Wolseley, the world's largest plumbing supplies group, warned there would be further job cuts and branch closures after reporting a 77% fall in annual profits, but it denied speculation that it was about to launch a rights issue or renegotiate banking covenants.

The business, which also deals in other building supplies, has been mauled by the housing downturn — particularly in the U.S. where its Stock subsidiary turned a tidy profit of £45m into a substantial loss of £123m and could yet be sold off.
""Financial discipline in terms of cost reduction and cashflow enhancement remains our primary focus to ensure the group remains compliant with our banking covenants and is well positioned for any market recovery,"" said Chip Hornsby, the chief executive.
He declined to put a number on further redundancies or depot disposals but said that with no sign of an early improvement in the U.S. or UK housing markets there was no alternative but to make further savings.
Wolseley, which reported overall pre-tax profits of £145m, has scrapped the final dividend to save cash and has already taken the axe to 270 branches and 7,000 jobs to try to make annual savings of £176m.
And while it headed off stock market gossip that it was planning to go cap-in-hand to shareholders or bank lenders, Wolseley admitted: ""These remain options should market conditions deteriorate very dramatically.""
Although 40% of the jobs at Stock have already been cut, Wolseley said it was undertaking a fundamental review of the business in order to ensure that it reduced its impact on the wider group results.
Hornsby would not say whether a sale of the whole business was in the offing, but Kevin Lapwood, an analyst at stockbroker Seymour Pierce, said the ailing American operation but was effectively on the block — and had no immediate buyers in sight.
""The group losses at Wolseley are almost all down to Stock and the problems of that operation are masking a decent performance elsewhere,"" said Lapwood.
James Cooke, an analyst at Panmure Gordon, said trading uncertainty remained high at Wolseley, but the positive management comments about its net debt position at £2.5b had encouraged investors.
""Our fundamental concerns mean we keep our negative stance, but we expect the shares to see a relief bounce,"" he said.
Shares in Wolseley rose nearly 10% in early trading to 454p in relief that the news was not worse from a group that has seen its stock market capitalization fall by almost a half this year in the face of difficult housing conditions.
Hornsby said affordability and mortgage availability remained a serious problem in the UK housing sector while the U.S. was ""continuing to spiral downwards"" with a rise in the number of foreclosures.
The Wolseley boss said it was difficult to predict what impact last week's banking and financial crisis would have on Wolseley. He said: ""I wish I could answer that. I read all the news over the weekend and I still can't determine exactly what is going on.""
(Source: Guardian)