Wolseley shares hit by debt worry

British building supplies firm Wolseley saw its shares tumble today after revealing its debt mountain increased to £3bn (€3.2bn) at the end of 2008.

The company, which trades as Build Center and Plumb Center, blamed the £557m (€594m) adverse effect of currency movements for the 22% rise on the position seen at July 31.

Wolseley added the collapse in trading conditions meant profits for the five months to December 31 were down by around two-thirds on last year.

Investors were shaken by the update, with Wolseley shares down by more than 17% and Travis Perkins, which operates in the same sector, 11% lower.

Wolseley has kept up its focus on controlling costs, including through November’s announcement of 2,000 job cuts and 200 branch closures in the UK.

It said it expected the debt position to be lower by the end of January, adding that it had committed and undrawn banking facilities available of more than £1bn at the end of December.

Chief executive Chip Hornsby said the company was focused on achieving compliance with its banking covenants, while at the same time ensuring the business is well positioned to benefit when markets improve.

He added: “We continue to act decisively and rapidly in response to the unprecedented market conditions we face.”