Travis Perkins says construction sector unlikely to recover until after election

05 March 2024 , 13:01

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Travis Perkins said that revenue dropped last year (Image: PA Archive/PA Images)

The UK construction industry is expected to struggle until a new government is in place after the election later this year, according to Travis Perkins.

The construction supplies firm said its customers were holding back on projects until they knew what support a new government might offer and what would happen to interest rates. The company said: "A recovery in the UK construction sector is unlikely to gather any momentum before the UK general election is concluded with the group's customers, large and small, inevitably waiting to see if there is a post-election government stimulus package for the sector and also seeking clarity on the future direction of interest rates."

A general election will be held by January 28, 2025. Travis Perkins also said it was considering selling its French Toolstation business, which has 51 stores in the country. The French business has been hit by problems including a lack of awareness of the brand in France, serving less populated areas and low demand.

The business revealed: "Taking these factors into consideration, and with forecast losses expected to increase to £20 million in 2024, management has concluded that the investment required to reach profitability is no longer sustainable and today confirms that it is working on a plan for a potential exit of the business," the business said.

It has also been shared that the options for Toolstation Benelux, with its 119 shops are being reviewed. Toolstation Benelux lost £19 million last year, an increase from £15 million the previous year, despite sales growing 11%.

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Meanwhile, Travis Perkins reported a 2.7% decrease in revenue to £4.9 billion with pre-tax profits falling from £245 million to £70 million. Adjusted operating profit also saw a decrease of 39% to £180 million. Travis revealed that a £24 million slice of this drop was due to falling prices for timber products in the second half of the year.

Chief executive Nick Roberts said: "Ongoing economic challenges have significantly impacted our trading performance, driven by weakness in the new build housing and domestic RMI (repair, maintenance and improvements) sectors, and compounded by deflationary pressures on commodity products."

He continued, "Faced with these challenges, we have invested to protect and build our leading market positions. With market conditions expected to remain a headwind through 2024, the business is fully focused on improving profitability and enhancing cash generation."

Lawrence Matheson