Travis Perkins to miss profit expectations amid ‘challenging conditions’

Building supplies company Travis Perkins warned that it will miss profit expectations this year as it faces “challenging conditions.”

The business told shareholders on Wednesday to expect an adjusted operating profit of between £175-195 million this year.

That would be a lot lower than the £236 million and £250 million that analysts had previously said they think the business would make.

Travis said that both the housebuilding sector was weak as well as 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% in the third quarter, with overall group revenue down 1.8%.

“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 subsidiary Toolstation has been able to grow well in the UK and Europe. UK revenue grew by 7% in the quarter, while in Europe growth reached 9%.

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% on Wednesday morning.