Travis Perkins has warned that its full-year profit will be lower than previously forecast as it bears the impact of a slowdown in housebuilding.
The FTSE 250 firm said that due to “ongoing challenging market conditions”, it expected its adjusted operating profit to be around £240m. In April, the UK’s biggest builders’ merchant forecast an annual profit of £272m.
Last year the firm cut 400 jobs and closed 19 offices as it reported a fall in pre-tax profit.
In a trading update today, Travis Perkins said the expected relaxation of markup conditions in its second quarter had not materialized.
“Volumes in both the new build housing market and the private domestic RMI (repair, maintenance and improvement) market continue to be affected by higher interest rates and weaker consumer confidence driven by inflation persistent and higher-than-expected consumer prices,” the firm said. .
It comes after several housebuilders have said they plan to scale back development.
Experts also predict that the Bank of England will raise interest rates again next week, which will further shrink the mortgage market.
However, Travis Perkins said it was seeing “more resilient performance” in some of its other markets: commercial, industrial, infrastructure and public sector housing. Its Toolstation chain continues to “perform in line with expectations” in the UK and Europe, the firm added.
Looking ahead, the company said it is “well-positioned to benefit from a recovery and long-term structural drivers in its end markets, including the long-term undersupply of new homes and refurbishment of domestic and commercial properties”.
Shares in Travis Perkins were down 7 per cent in early trading but had recovered slightly by 11.30am, up 5.9 per cent to 815.6p.
