Travis Perkins profit slumps after demand for building projects wanes

The Northampton-based company said it has also been hit by a drop in commodity prices, mainly timber.

Travis Perkins has said its profit dropped by a third this year (Travis Perkins/PA) (PA Media)

Travis Perkins has said its profit dropped by a third this year, as the UK’s biggest building supplies firm was weighed down by falling prices and an ongoing slowdown across the UK’s construction sector.

The Northampton-based company reported an adjusted operating profit of £75 million for the first half of the year, down 33% on the £112 million reported a year ago.

It blamed tough conditions in the market including weaker demand for building projects and home improvements.

It also saw its own sales hit by a drop in commodity prices, mainly timber, and prices becoming more competitive across the market.

This helped drive a 4.4% decline in revenues to £2.4 billion for the year, the firm said.

Travis Perkins said it welcomed the new Government’s plans to target more housebuilding and improvements to infrastructure which it said will boost trading conditions for builders.

Coupled with a reduction in interest rates, which is expected to trigger more activity in the housing market, its financial performance is set to improve next year.

But the company warned that the changes will take time to take effect, and therefore downgraded its profit expectations for this year to around £150 million.

Meanwhile, Travis Perkins – which also owns the Toolstation chain – said it has been taking action to make its organisation more efficient and generate cost savings.

Restructuring action, including cutting staff in its head office and regional branches, has helped lower business costs, it said.

It has also moved to shut down two Toolstation warehouses in Bridgwater, Somerset, and Daventry, Northamptonshire.

The reality of the challenges facing the business have come flooding back into view

Mark Crouch, eToro

Mark Crouch, a market analyst for investment platform eToro, said: “Travis Perkins was galvanised by Labour’s election win, with their share price jumping by 25% in July.

“However, the honeymoon period looks to have been short-lived as the reality of the challenges facing the business have come flooding back into view.

“Despite glimpses of positive data starting to emerge to suggest housing is on the up again, higher interest rates and the cost-of-living crisis still weigh heavily on consumers.”