The difficulties faced by the construction industry are well-documented and today, are clearly visible in Travis Perkins’s full-year results.
Volumes were weaker as builders held off on new construction projects. However, the real blow for Travis Perkins’ financials is that after years of price inflation, the company is experiencing price deflation, especially in timber goods.
This is welcome news for the construction industry as a whole, but increased competitiveness in the merchanting business means Travis Perkins has to pass on the lower prices to their customers.
The result was a 98% drop in operating profits for the year and 9% drop in Travis Perkins shares as of the time of writing on Tuesday.
“Travis Perkins’ full-year results make for grim reading, with the company reporting a 23% drop in annual profits. Shareholders cannot seem to catch a break as Travis Perkins shares have sunk to a 16-year low in 2025, hammering home the difficulties the company is facing,” said Mark Crouch, market analyst at eToro.
“The building materials supplier attributes the disappointing performance to a slow recovery in the construction sector, as the UK economy continues to struggle. With interest rates remaining stubbornly fixed in place, uncertainty is weighing heavily on both investors and consumers, leaving them hesitant to act.”
The company’s outlook underlines how desperate they are for interest rate cuts. Unfortunately, the Bank of England seems to have other ideas, and we may only see one or two more in the rest of 2025.
Travis Perkins said: ‘the pace and rate of an overall recovery in construction activity levels remains uncertain and will likely need further cuts to interest rates and an uplift to consumer confidence levels to stimulate a meaningful increase in demand’.