Travis Perkins to miss profit expectations amid ‘challenging conditions’

This would be a lot lower than the £236m and £250m that analysts had previously said they believed the business would make.

Travis said that the housebuilding sector was weak and there was also weakness in demand for home improvements and repairs. The company’s merchanting segment, which includes brands the BSS, Keyline, and CCF brands, had done well in the early part of the third quarter, but in September there was a “notable deterioration.” That business unit saw revenue drop 3.4 per cent in the third quarter, with overall group revenue down 1.8 per cent.

“Market conditions remain challenging with continued weakness across new build housing and domestic RMI (repairs, maintenance, improvement),” said chief executive Nick Roberts.

“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 business said that its subsidiary Toolstation has been able to grow well in the UK and Europe. UK revenue grew by 7 per cent in the quarter, while in Europe growth reached 9 per cent.

It said that inflation was still high, but that bosses are trying to find ways to minimise its impact on profitability. Mr Roberts said that keeping prices lower for customers “is the right approach, demonstrated by our ability to maintain volumes in this difficult market”.

He added: “However, this has impacted on our trading margins and is reflected in today’s revised guidance.

“With a strong balance sheet and leading customer propositions, we remain confident in our future prospects and work continues to position the group to benefit from the long-term structural drivers across our end markets, particularly with the need to decarbonise the built environment and to build more homes in the UK becoming ever more pressing.”

Shares fell 10 per cent on Wednesday morning. Figures released last week revealed that the UK’s construction sector contracted heavily last month as the housebuilding sector had one of its worst months since 2009. Companies said that projects to build homes were being cut back as demand weakens and the cost of borrowing rises.

“Output levels declined across the UK construction sector for the first time in three months during September and the latest downturn marked the worst overall performance since the early stages of the pandemic,” said Tim Moore, economics director at S&P Global Market Intelligence.

The latest S&P Global/CIPS construction purchasing managers’ index scored 45.0 in September, a steep drop from 50.8 in August. Economists had expected it to reach 50.0.

“A rapid decline in housebuilding activity acted as a major drag on workloads, with construction companies widely commenting on cutbacks to new residential development projects in the wake of sluggish demand and rising borrowing costs,” Mr Moore said.