Travis Perkins, the UK’s largest supplier of building materials, has revised its annual profit forecast, citing challenging conditions in the new-build housing and renovation markets. The company downgraded its projected adjusted operating profit for 2023 by up to 27%, with the new range estimated to be between £175 million ($215 million) and £195 million. This comes after a previous downgrade in June, which amounted to a 12% reduction.
In a statement, Chief Executive Nick Roberts acknowledged the difficult market conditions, stating, “Market conditions remain challenging with continued weakness across new build housing and domestic repair, maintenance and improvements.” The cooling of the UK housing market, triggered by an increase in interest rates, has deterred housebuilding and housing transactions, which often spur repair and improvement work. Additionally, a squeeze on disposable income has resulted in consumers cutting back on spending for their properties.
Travis Perkins noted a significant deterioration in market activity and sentiment in September, which has further impacted its profitability. The company is also facing deflation in commodity prices, leading to the sale of existing stocks at lower market prices in order to remain competitive. Despite these challenges, the group remains optimistic about the long-term outlook due to the ongoing need for more homes in the UK and the necessity of decarbonizing existing buildings.
The news of the downgraded profit forecast has had a notable impact on Travis Perkins’ stock performance. Over the past six months, shares in the company, which also owns Toolstation, have declined by 13%.
The revised profit forecast from Travis Perkins reflects the broader difficulties faced by the UK housing market. The industry has been grappling with a slowdown due to rising interest rates and reduced consumer spending. The company’s reduced profit outlook highlights the importance of addressing these challenges to support the growth and stability of the construction sector.
As Travis Perkins navigates the challenging landscape, it is clear that the company is taking a long-term perspective on the market. With the need for more housing and an increasing focus on sustainability, the company remains confident that it can weather the current storm and continue to play a vital role in the construction industry.
More detail via Reuters here… ( Image via Reuters )