Building merchant chief says people are "not in the mood for DIY" as firm warns of tough 2006.

Shares in builders merchant Travis Perkins fell 10% today after the firm predicted £20m drop in pre-tax profits and forecasted a tough year ahead for the industry.

The company’s trading update, released on 11 November, showed estimated pre-tax profits for the year to the end of December were likely to fall from £225m to £205m. The firm said turnover from its Wickes showrooms, which display kitchens and bathrooms, was down 21.1% in the four months to October 2005 compared with the same period in 2004.

Turnover from general builders merchanting, largely though its Travis Perkins stores, dropped 0.4% in the same period. Specialist merchanting turnover, mainly generated through its Keyline stores and its plumbing and drylining brands, saw a 0.9% fall during that time.

The company said business had been dented by competitors cutting their prices and poor consumer confidence.

Chief executive Geoff Cooper said mortgage costs would need to drop to encourage shoppers to spend.

He said: “People are just not in the mood for DIY and people are choosing to spend what money they have on Christmas not DIY. The only thing that will get them spending again will be people thinking they are better off.”

He continued: “Overall we are pretty happy with the performance of our business in a very difficult environment. We think everybody is suffering, but we are suffering a bit less than the others.”

The firm will continue to expand at its usual rate of around 60 to 80 new outlets a year. Most are likely to be on brownfield sites, but it will buy independent merchants if asking prices for the firms drop.

Shares fell from 1413p at close of trading on 10 November to 1268p at 10.30am on 11 November when the statement was released.