Wolseley, the world’s largest supplier of plumbing and heating equipment, has crashed to a £766 million pre-tax loss after a turbulent year in which it has been forced to cut more than 10,000 jobs.

The company has been badly affected by the recession and the slowdown in the housing market, which turned a £399 million profit last year into a heavy loss for the 12 months to July 31.

It has launched a cost-cutting drive that will eliminate £233 million of overheads by next year and lead to the closure of 653 branches.

Wolseley, which lost Chip Hornsby,its chief executive, in July, gave a pessimistic outlook for the coming year, saying that construction activity in the commercial and industrial sectors was still in a period of “accelerating decline”. Ian Meakins, its new chief executive, said that short-term trading conditions would remain challenging because of tight credit conditions, higher levels of foreclosures and rising unemployment.

Wolseley falls into red as jobless tally hits 10,000 Briefing: Wolseley

Mr Meakins said: “The residential sector is seeing a flattening-out, but we are still seeing a decline in the industrial and commercial sectors, particularly in the United States, and, as a result, we will see our overall market continue to decline in the coming year.”

Despite the pessimism, the results were not as bad as had been feared and Wolseley was the top gainer in the FTSE 100. It closed 146p up at £14.55, a rise of 11 per cent.

Analysts at Numis Securities said: “We continue to believe that there is good medium-term value in Wolseley from this low base and that management actions are key to unlocking this potential.”

Wolseley said that no final dividend would be paid after it raised £1 billion from shareholders in a rights issue in April. The rights issue has enabled the company to reduce its debt from £2.5 billion last year to £959 million and it was now well within its banking covenants. Revenues for the past year were down 2.5 per cent at £14.4 billion.

Mr Meakins said that he wanted to concentrate resources on the company’s four core geographical divisions: Britain, the United States, the Nordic region and France.

In the past year, Wolseley has reduced its shareholding in Stock Building Supply, an American-based building materials company, and has announced its intention to sell its Benelux, Czech Republic and Slovakian operations.

Disposals led to an impairment charge of £595 million during the year and there was an additional £458 million, primarily from restructuring costs.

Mr Meakins said that further cost reductions would be implemented but at a slower rate than in the previous year. “Cost reductions will be less than they were in the past because we are conscious that we want to exit this recession with staff in place to take advantage of growth,” he said.

Analysts at Charles Stanley said: “The 2009 headline financial numbers look dire and significant challenges still lie ahead for the company. We take some solace from some of the more positive trends, such as improving cashflow in spite of the lower profitability. Net debt has fallen much more than expected and potential efficiencies for 2020 are also better than expected.”