European job losses to follow US cuts as part of materials group's restructuring as profit falls 30%

Building supplies group Wolseley has said it will slash jobs in Europe before the end of July after a “pronounced slowdown in recent weeks”.

The cuts will follow the loss of 250 jobs in America as the sub-prime debt crisis worsens.

In the nine months to 30 April 2008, pre-tax profit across the group was down 30% while turnover was up 2%.

In Europe trading profit was 6% lower and turnover was up 3%.

A company statement said: “These restructuring actions and other business improvement initiatives should result in annualised cost savings of around £70m.”

It will provide details of the cuts in a future announcement, which will make a one-off dent in the company's balance sheet of £50m.

Some had feared the group would be forced into a rights issue after gearing reached 84% in January but the level has since inched back to 81%.

The City welcomed the cost cutting given the longer-term market uncertainties.

Kevin Cammack at Kaupthing said shareholders should welcome the “aggressive right-sizing” of the company.