Shares in Wolseley, the plumbing and building products supplier, dived 9 per cent this morning after it warned that its key customers, US housebuilders, could face their thinnest year since the Second World War.

Wolseley said problems in the US had dented group profits by 25 per cent in the last five months and the pain was now spreading to Europe.

Shares in the FTSE 100 company fell 65.5p to 60.5p, less than half their level of nine months ago. It was the second gloomy trading statement from the company in two months.

Only by taking the axe to headcount - slashing 3,000 jobs in North America alone - had Wolseley prevented a steeper profits collapse. US profits fell by more than 40 per cent over the first five months of the year.

Wolseley said market conditions were "likely to worsen," because of the deteriorating US housing market, global credit restrictions and the weak US dollar.

A key US division that sells stock and relies on new housebuilders for 85 per cent of its sales, is now lossmaking.

New builds have collapsed in the US after several years of more than two million new starts a year because of sliding prices caused by the bursting of the sub-prime mortgage bubble.

Steve Webster, chief financial officer at Wolseley, told Times Online: "We haven't seen less than one million US housing starts in a year since the Second World War. But you can't now rule that out."

Wolseley relies on the US for 50 per cent of sales and in better times, between 50 and 60 per cent of profits.

Analysts were forecasting pre-tax profits of between £498 million and £734 million for the year to July, but some of these forecasts are likely to be shaved back in the wake of the statement.

In Europe good perfomance in the UK, Scandinavia and the Netherlands was offset by falling profits in France, Austria and Italy.

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