Challenging market impacts Travis Perkins’ Q3 sales and profits

Builders merchant group Travis Perkins has reported that market challenges  and “significant commodity product deflation” will affect full-year profit expectations, while Q3 sales and profits fell 1.8%.

In the third quarter revenue from the group’s merchanting businesses fell 0.3%, and 6.4% on a year-to-date basis, while Toolstation UK delivered revenue growth of 7% in the third quarter whilst Toolstation Europe saw revenue growth of 9%.was up 2.5% and 2.6% respectively.

Full-year profits are now expected to be somewhere between £175m to £195m, a statement released this morning (October 11) said.

The pronounced slowdown in new build housing and domestic RMI activity has persisted into the third quarter, with September seeing a notable deterioration in market activity. Deflationary pressure on prices significantly impacted on gross profit and margins, including the impact of selling through existing stocks at lower market prices than anticipated.

Nick Roberts, Chief Executive, said: “Market conditions remain challenging with continued weakness across new build housing and domestic RMI. Deflation on commodity products has also been greater than we had anticipated. In this environment, our priority has been to ensure that we deliver for our customers, both on service and pricing, as we seek to retain and grow our customer base for the medium to long term.

“This is the right approach, demonstrated by our ability to maintain volumes in this difficult market. However, this has impacted on our trading margins and is reflected in today’s revised guidance.

“With a strong balance sheet and leading customer propositions, we remain confident in our future prospects and work continues to position the Group to benefit from the long-term structural drivers across our end markets, particularly with the need to decarbonise the built environment and to build more homes in the UK becoming ever more pressing.”