WOLSELEY is to cut up to 800 UK jobs and close around 80 branches costing the company about £100 million, the plumbing and heating supplier said on Tuesday despite reporting rising sales and profits.
The FTSE 100 company said it would close a distribution centre and cut around 800 jobs following a review of operational strategy to transform the UK business and offer customers “a leaner, more efficient operating model”.
Wolseley reported pre-tax profit of £727m, a record for the group, on revenue of £14.4bn, but only £74m profit for the UK business, a fall of £16m on last year, accounting for just 8% of group trading profit. It attributed the loss to a decline in its core repair, maintenance and improvement markets.
Announcing its annual results, the company said it would continue to hire and train staff but it would focus on improving its operating models and allocate resources to “where they can generate the best returns for shareholders”.
Its US subsidiary generated over 80 percent of the group’s trading profit in 2016 and the company made clear it would invest more and more quickly in Ferguson’s revenue growth.
Wolseley’s shares fell 3.49% to £41.45 this morning.
The jobs losses are subject to consultation which will commence shortly and is expected to take 90 days. The UK restructuring will take two to three years and is expected to generate £25 million to £30 million of annualised cost savings when complete.
CEO John Martin said in a statement: ““Our review of UK operational strategy has identified opportunities to transform our customer propositions whilst simplifying our branch network and supporting logistics facilities to greatly improve service levels, drive availability and choice for customers and generate better returns for shareholders. Regrettably this will result in job losses which we will handle sensitively and minimise through redeployment and attrition as far as possible.”
In August 2016 Ian Meakins, who had been CEO since July 2009, retired and was replaced by John Martin. A month late David Keltner, who has over 10 years’ experience as CFO of the US business, was appointed interim chief financial officer. The selection process to appoint a permanent CFO is ongoing.
Shareholders are expected to receive a final dividend of 66.72 pence per share.