Heating and plumbing products distributor the Wolseley Group (Wolseley) is making 180 of its UK staff redundant. The building materials supplier is also closing 47 of its 1900 branches as it seeks to reduce its cost base and benefit from improving markets while it sits out a slowdown in the US residential market. America is key market for the Group. Cazenove, the financial advisors, estimate that Wolseley extracts approximately 28 per cent of its underlying earnings from new house sales in the US. Over there, mortgage defaults rose to a three-year high in the fourth quarter of last year. A Wolseley spokesperson confirmed the redundancies and the branch closures but denied that the slowdown in the US was hurting UK operations or that the move had been influenced by the Group’s shock 17 per cent fall in pre-tax profits. Up until last month, the Group had reported nine consecutive years of record, double-digit growth. “The redundancies and branch closures are part of a restructuring initiative,” she said. “Wolseley has built up a successful business rapidly over the last three years. The company is in the process of rationalising and centralising the systems in Leamington Spa and consequently is closing 47 loss-making branches.” However, Chip Hornsby, Group chief executive, implied otherwise when he announced the company’s interim results for the six months to January 31 last month. “The decline in US housing starts has clearly had an impact on our results for the first half but we have taken swift and decisive action to reduce our cost base and to position the Group to benefit from improving markets,” he said. “We will continue to pursue our double-digit growth targets through a combination of organic and acquisitive growth with a renewed focus on margin, cash flow and working capital improvement.” He said the Group was consolidating most its UK staff into a head office in Leamington Spa, building a national distribution centre with an online presence and expanding into new areas such as hire, electrical and insulation. For the half-year ended January 31, Wolseley reported a 17 per cent drop in pre-tax profits from £285 million, against the £346m posted in the same period last year. Housing starts declined 35 to 40 per cent from an average annual rate of 2.1m for the six months to 31 January 2006 to an average of 1.6m over the same period this year. Turnover rose 16.9 per cent to 7870m. In the UK, the Group’s trading profit increased by 3.2 per cent in the first half, compared to the equivalent period last year. One-off costs were approximately £5m. The Group said further rationalisation costs of approximately £6m are anticipated in the second half of this year.