Travis Perkins shares were deep in the red on Thursday after the building merchants released another downbeat assessment of their business and the wider environment.
Falling revenue and another reduction in their profit forecast were too much for some investors who offloaded the stock on Thursday and sent the shares down 6%.
Travis Perkins’ 5.9% revenue drop, driven by slow merchant trade, is at odds with the Labour government’s plans to fire up the economy with a wave of construction. The company’s Q3 update released today was devoid of any positives related to the promised recovery in housebuilding.
Indeed, Travis Perkins is so concerned about the near-term future that it reduced its 2024 operating profit guidance to £135m from the £150m guidance issued just a few months ago.
There were some bright spots in the group’s retail Toolstation unit, which enjoyed a 2.9% increase in sales in the UK and 9.6% in Benelux.
“It felt like only yesterday that Labour’s housing policy pledges were going to rejuvenate the UK property market and fire the sector back into favour,” said Mark Crouch, market analyst at investment platform eToro.
“However, Travis Perkins’ latest trading update does not offer any support to that narrative, in fact by the looks of these numbers, quite the opposite.
“Travis Perkins, the UK’s largest supplier of building materials, has slashed profit guidance for the second time in three months as revenues continue to fall. Weaker demand has been driven by a consumer that is still reluctant, and despite initial interest rate cuts, a feeling of uneasiness still lingers over the market.
“Along with battling the challenging market conditions, Travis Perkins, according to their new CEO, has become distracted and overly internally focused, which has further impeded the company’s overall performance, and is something they will need to put right fast if they are to reverse what is a worrying trend. While further rate cuts could be on the cards in November, for Travis Perkins, November can’t come soon enough.”