Builders merchant says exepcted recovery in setor has not happened

Travis Perkins has warned profit will be lower than expected because of weak demand and higher interest rates hitting both the new build housing and refurbishment markets.

“In light of ongoing challenging market conditions, full year adjusted operating profit now expected to be around £240m,” the builders’ merchant said in a trading update this morning.

In 2022, adjusted operating profit was £295m.

travis perkins

Travis Perkins expects staff cuts made at the end of 2022 to deliver around £25m in cost savings this year

The company said that an anticipated easing of market conditions in the second quarter to date has not occurred.

Confidence has been impacted “by higher interest rates and weaker consumer confidence driven by persistent, higher than anticipated consumer price inflation”.

Trade demand in the commercial, industrial, infrastructure and public sector housing sectors is holding up while Toolstation continues to perform in line with expectations, it added.

It said: “The Group is driving the trading strategy to effectively navigate the near-term market conditions, alongside its ongoing focus on delivering operational efficiencies in the business.”

At the end of last year, the business closed 19 branches and laid off 400 staff because of expected “lower levels of activity in the UK construction sector in the year ahead”. The restructuring cost £15m.