Travis Perkins is a perfect play on the recovery of the UK housing market. It will undoubtedly be one of the biggest beneficiaries of the Labour government’s push to build 1.5 million during their tenure.
However, that push is yet to get underway, and today’s numbers highlight the challenges facing the UK construction industry. Travis Perkins admitted any benefits from a housing push and lower interest rates would take time to effect underlying performance.
A slow construction industry in the first half of 2024 has translated into a 33% drop in operating profits for Travis Perkins in their first half period. Falling profits were a result of price deflation and falling volumes.
“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,” said Mark Crouch, Market Analyst at investment platform eToro.
“The UK’s largest supplier of building materials has suffered a steep drop in profits in the first half of 2024 after demand for housing and building supplies continues to wane. And while Travis Perkins has substantially improved operational effectiveness and its overheads within the business, market conditions are making things increasingly difficult.
“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.”
Travis Perkins said it was on track to exit loss-making Toolmaker France as it streamlines the business to focus on the most profitable areas.