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Plumbing supplies merchant Wolseley has reported a 7.3 per cent drop in its full-year profits, with the group's performance having been hit by the weak US housing market.

The world's largest distributor of plumbing and heating products posted a profit before tax and amortisation of £758 million in the 12 months to July 31st, down from £817 million in 2006.

Wolseley said sales across a number of the group's businesses had suffered as a result of "uncertainty" related to recent events in the US sub-prime mortgage market, where rising default levels have prompted a global credit squeeze.

The Reading-based group, which generates around half of its sales in North America, stressed that it was "too early" to determine whether the trend would continue, but warned: "There are no signs yet of any upturn in the US housing market and the repairs, maintenance and improvement (RMI) market is now beginning to soften."

In North America trading profit, reported in sterling, declined by 19.2 per cent to £487 million over the year.

Nonetheless Wolseley said it expected the commercial and industrial market in the region to "remain positive". It also expects to report further progress in Europe, where the "underlying fundamentals of the construction markets remain sound".

In the UK, Wolseley said that it experienced strong growth over the year, despite rising interest rates. Government spending on schools, hospitals and social housing RMI "underpinned" the construction market in Britain, the company explained.

Wolseley, which reported a 14.6 per cent increase in overall revenues to £16.22 billion, also revealed that it intended to continue its strategy of combining organic growth with acquisitions.

Commenting on the results Wolseley chief executive Chip Hornsby said: "Despite the ongoing difficulties in the US housing market, we have produced a very creditable performance."