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2023 10 11T064729Z 2 LYNXMPEJ9A08G RTROPTP 4 TRAVIS PERKINS OUTLOOK - Business Express

Travis Perkins shares sink as weak housing market prompts profit warning

Travis Perkins shares sink as weak housing market prompts profit warning

By Sarah Young

LONDON (Reuters) -Travis Perkins, Britain’s biggest supplier of building materials, downgraded its annual profit forecast by as much as 27% on Wednesday, blaming ongoing tough conditions in the new-build housing and renovation markets, hitting its shares.

The group said it now expected 2023 adjusted operating profit to be in the range of 175 million pounds ($215 million) to 195 million pounds, down from the 240 million pounds it had guided to in June, itself a 12% downgrade.

“Market conditions remain challenging with continued weakness across new build housing and domestic repair, maintenance and improvements,” Chief Executive Nick Roberts said in a statement.

Shares in Travis Perkins sunk by as much as 12% in early deals, hitting their lowest level for over three years.

Britain’s housing market has cooled this year after a jump in interest rates, which is deterring house-building and dampening the house sales that often prompt improvement work. Moreover, a squeeze on disposable income means consumers are not spending on their properties.

Travis Perkins said it experienced “a notable deterioration in market activity and sentiment” in September.

It also said its profit would be hit by deflation in commodity prices which meant it was selling existing stocks at lower market prices to stay competitive.

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Pricing declined by 3.1% in the July-September period, Travis said, and analysts at Peel Hunt warned that price weakness could result in further downgrades.

“The trajectory into full-year 2024 is clearly now key and we expect to see numbers cut here too,” the analysts said in a note.

Travis Perkins said it remained confident in its longer-term outlook because Britain needed to build more homes and existing infrastructure would need to be decarbonised.

Separately, Forterra, a British company which manufactures clay and concrete building products, said demand for its products has softened since July.

($1 = 0.8140 pounds)

(Reporting by Sarah Young; editing by William James, James Davey and Emelia Sithole-Matarise)


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