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Wolseley (WOS) 731p

The US housing market crash has wiped off nearly a third of group profit for building materials group Wolseley in the last five months of 2007. (Read the full story: www.sharesmagazine.com/node/2966)

Shares says: The company, with activities including plumbing and heating products, earns over half of its estimated £16 billion sales in North America. In the five-month period, US profits fell by 40% . It has cut jobs and moved to restructure operations, but a gloomy outlook suggests more is needed. Many European operations nudged up profits, but analysts aren’t sure it offsets US woes. Investors must wait and see if diverse geographical coverage is it saviour. HOLD

Telegraph says: Wolseley tried to reassure analysts sharp earnings falls near the end of the five-month period resulted from poor weather, French strikes and a shortage of December trading days because Christmas fell on a Tuesday. US new house starts look set to fall below a million, price pressure is rising and a global economic slowdown is under way. Wolseley has broad international reach and can snatch market share in bad times. Highly geared, it may have to cut thousands more jobs before the market recovers. Investors must take a long-term view. HOLD

The City – Evolution says: We have responded to the worse-than-expected trading update with further deep cuts to our estimates. The going in the US is very tough. France is going to take longer to turn around than was earlier thought. Taking these factors in we are now looking for pre-tax profit this year to be off by 28% – still less than the nearly one-third lower indicated for the five-month stage. We see little growth appearing next year. This is going to be a difficult ride and we see volatility trending lower with no near-term respite and possibly rising pain as other regions find trading more challenging. The pressure that Wolseley is experiencing doesn’t stop it from being a good company. Undoubtedly the opportunity will be taken to buy weakened competitors and other competitors are likely to be forced out of the market. The bounce back when it comes should be strong. The problem is that the struggle looks as if it will last longer than the market had been anticipating. It is in our view still too early to be buying back shares in the company. SELL