Travis Perkins warns of £65m hit to profits

TravIS Perkins has slashed its profit forecasts by as much as £65m as the slump in the housing market takes its toll.

Britain’s biggest supplier of building materials said profits for the year would be between £175m and £195m – down from £240m it previously laid out.

Bosses said sales dropped 1.8pc in the three months to the end of September. travis Perkins, which sells materials for DIY projects as well as major construction jobs, has suffered as fewer people buy and sell properties, knocking demand for products.

the bleak economic backdrop has also meant many cashstrapped families are delaying home improvements, including extensions and conversions. the housing market slowed as the Bank of england raised interest rates from 0.1pc in December 2021 to their current level of 5.25pc today.

It is not just travis Perkins feeling the strain. Brick maker Brickability told investors yesterday it expected revenues for the first half of its financial year to come in at £324m, down from £352.7m last year.

It said: ‘the impact on the UK housebuilding market of interest rates remaining high will continue to provide headwinds into the second half of the year.’

Meanwhile the clay and concrete building products company Forterra said that market improvements seen in May and June did not continue, with demand deteriorating in July and august.

Shares in travis Perkins fell 6.2pc, or 49.6p, to 756p. Forterra was down 5.2pc, or 7.4p, to 136.4p and Brickabilty by 0.5pc, or 0.25p, to 46.5p.

the gloom spread through the stock market with kitchen maker Howden Joinery down 4.8pc while B&Q and Screwfix owner Kingfisher fell 2.5pc. Nick roberts, chief executive of travis Perkins, said that the industry outlook was worse than anticipated – especially with the ongoing pressure to slash prices to attract customers.

on average, travis Perkins cut prices by 3.1pc over the summer.

He said: ‘Deflation on commodity products has also been greater than we had anticipated.

‘In this environment, our priority has been to ensure that we deliver for our customers, both on service and pricing, as we seek to retain and grow our customer base for the medium to long term.’

the Northampton-based firm has 563 stores in the UK and employs 5,500 people.

russ Mould, an analyst at aJ Bell, said: ‘the only way it can keep the tills ringing is to slash prices and make sure it is offering superior service. the former implies lower profit margins and the latter suggests it might need more workers on the shop floor, pushing up costs.

‘In this situation, travis Perkins probably has no choice but to take a hit on margins – good for customers but bad for its financial results.’