By Aby Jose Koilparambil
(Reuters) -Building materials supplier Travis Perkins cut its annual profit guidance while smaller industry peer SIG’s half year profit slumped 64%, hurt by weak pricing and a decline in volumes.
Companies linked to the housing sector have been under pressure for more than a year as Britons delay home-improvement projects while new construction activity has slowed considerably in the face of broader economic woes.
Many expect the situation to improve as UK’s first rate cut in more than four years has spurred hopes of increased consumer spending, while the new Labour government’s move to ease planning restrictions and boost land supply has brought some optimism to the sector.
But Travis Perkins, Britain’s largest building materials supplier, said it does not expect a turnaround in the near term.
“We will probably need at least two rate cuts before I think consumers will start to feel more positive,” CFO Duncan Cooper told Reuters, predicting that it would take another year to see any meaningful uptick in the sector.
Travis Perkins forecast annual earnings of about 150 million pounds($191.4 million), down from its previous projected range of 160 million to 180 million pounds. Adjusted operating profit for the six months to June 30 was down 33%.
SIG Plc, which sells roofing and insulation materials in Britain and some European countries, reported a 64% slump in half-year underlying operating profit, but the group retained its annual earnings guidance.
Investec analyst Aynsley Lammin said near-term trading in the building materials and related products sector is “unlikely to recover significantly”.
“Hopefully, 2025 starts to look better as interest rate cuts help,” said Lammin.
Travis Perkins shares were down 1% at 870 pence by 0808 GMT, while SIG shares fell about 2% to 22 pence.
($1 = 0.7836 pounds)
(Reporting by Aby Jose Koilparambil in BengaluruEditing by Subhranshu Sahu, David Goodman and Conor Humphries)
