Travis Perkins warns on profits, shares slide

(Sharecast News) - Shares in Travis Perkins fell sharply on Wednesday, after the builders' merchant warned that the slowdown in the construction sector would hit profits. The firm, which has also seen its margin affected by "significant" commodity product deflation, now expects full-year adjusted operating profits to come in between £175m and £195m, down from an earlier forecast for £240m.

Updating on third-quarter trading, Travis Perkins said the period had started as expected before a "notable deterioration" in market activity and sentiment from September.

As a result, merchant revenues in the three months to 30 September fell 3.4% year-on-year, while pricing declined by 3.1%. Toolstation, its retail brand, fared better, with like-for-like sales up 4.4%.

Overall, group revenues were down 1.8%.

Nick Roberts, chief executive, said: "Market conditions remain challenging, with continued weakness across new build housing and domestic RMI (repair, maintenance and improvement).

"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.

"However, this has impacted on our trading margins and is reflected in [the] revised guidance."

As at 0930 BST, shares in the FTSE 250 firm were off 9% at 732.8p.