Wolseley confirms �1bn cash call

Plumb Centre, one of Wolseley's businesses

Wolseley's share price

Building materials group Wolseley has confirmed plans to raise �1bn from investors, after a big fall in profits.

The company said it would use the funds to reduce net debts of about �2.5bn. Shares in Wolseley closed down more than 15% following the news.

Wolseley reported pre-tax profits of �97m for the six months to the end of January, down 61% on the same period a year earlier.

Earlier this week, HSBC and Premier Foods announced similar calls for cash.

Wolseley said the main reason behind the share issue was the continued impact on its business of the deterioration in the US housing market.

Wary outlook

Wolseley confirmed it was looking to sell its US building materials business, Stock, by August 2009 or find a joint venture partner for it.

It is reviewing its central and eastern European businesses.

Instead, it is focusing on its core businesses in the UK, Irish Republic, Scandinavia and France and on its plumbing and heating business in North America.

"If markets deteriorate further than anticipated, the board will ensure further actions will be taken to mitigate the resulting impact," the company said in a statement.

Wolseley, which owns Plumb Center and Build Center in the UK, has cut around 17,000 staff and shut 713 branches globally since August 2007.