The credit crunch has pushed pre-tax profit down 77% at building materials group Wolseley.

In its annual results, announced on Tuesday, the group said pre-tax profit had fallen from £634m to £145m in the year ending 31 July 2007. It said its British and Irish divisions had experienced tougher trading than the rest of Europe. Operating profit across the region fell 1.2% from £433m to £428m, although turnover was up by 13% from £7.6bn to £8.5bn.

The company is heavily exposed to the US housebuilding market and its fortunes have been severely affected by the American downturn.

Turnover, however, rose 2% overall from £16.2bn to £16.5bn owing to “aggressive cost cutting” over the year. During that time, Wolseley restructured its business to achieve savings of £47m, but at the expense of 270 branches and 7,100 jobs. Since the year end, it has reduced its 74,000 headcount by a further 600.

Wolseley said: “The group will continue to focus on the cost reduction and cash maximisation actions that are appropriate in difficult markets. We will achieve increased productivity and efficiency, with further restructuring being undertaken”.

The group said there were no plans to raise equity or renegotiate its banking covenants, although they were options if market conditions deteriorated dramatically.