Britain's Travis Perkins lowers 2024 profit outlook again
Shares fall more than 7% in early trade
Co sees early recovery signs, but expects growth to be slow
Adds share move in paragraph 2, analyst comment in paragraph 6
Oct 24 (Reuters) -Britain's largest buildings materials supplier Travis Perkins TPK.L lowered its annual profit outlook for the second time in three months on Thursday amid weakness in its merchanting business, sending its shares lower.
Shares in the FTSE 250 .FTMC firm, which had already declined more than 11% this year, fell as much as 7.3% to 855 pence in early trade.
Housing sector-related firms have been grappling with weak demand for over a year, with Britons squeezed by a cost of living crisis postponing home improvement projects and new construction activity slowing amid broader economic challenges.
"It is clear that the group has allowed itself to become distracted and overly internally focused which has led to the underperformance in recent periods," said CEO Peter Redfern, the former boss of homebuilder Taylor Wimpey TW.L who took the helm last month.
Redfern said his immediate priorities are driving branch-led performance and ensuring that the group turns and faces the anticipated recovery in the UK construction market.
Barclays analysts said the comments suggest the focus will be on execution, rather than more radical steps, which they believe is the right approach to address the issues the business has faced in recent years.
Travis Perkins reported a 5.7% drop in group revenue in the third quarter to end-September, with its merchanting segment, which sells building materials like wood and sand, seeing an 8.2% revenue decline on a like-for-like basis.
The company sees "some very early signs of recovery" in its main end markets but cautioned that this positive growth will be slow, with financial performance benefits materialising only by the second half of 2025.
The Northampton-based company expects 2024 adjusted operating profit of about 135 million pounds ($174.5 million), down from the 150 million pounds it indicated in August.
Travis Perkins, which spun off its home improvement business Wickes and sold its plumbing and heating division in 2021, said its loss-making operations in Toolstation France remained on track for full closure by year end.
($1 = 0.7735 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Eileen Soreng, Kirsten Donovan
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
