Travis Perkins shares fall on profit warning
Travis Perkins has downgraded its annual profit forecast, amid ongoing tough UK market conditions. IGTV financial analyst @AngelineOng takes a look at the UK house building supplier’s fortunes within the sector.
(Video Transcript)
Britain's biggest building materials supplier faces losses
Travis Perkins shares are sliding as we speak, investors not liking its profit warning at all. Let's have a look at its shares right now because there you have it, the red candle there showing the losses at the moment. It is in session down more than 5%.
Britain's biggest supplier of building materials warning that it now sees its for-year profit down 19% to 27% and the third-quarter pricing also declining by 3%.
Now behind the weakness, ongoing tough conditions in the new-build sector, times are also still really uncertain and people are not going to be renovating in this sort of uncertainty.
Demand for building supplies weakened from July
Let's take a look at some of the other players in the industry as well. Forterra, which makes clay and concrete building product, says demand has weakened since July.
I want to look at house builders as well because the likes of Berkeley and also Persimmon and Crest Nicholson, they have all warned of a gloomy trading environment and this is due to higher borrowing costs and wider macroeconomic concerns.
Major headwinds could still come
So where is the 'salad dressing', despite the Bank of England looking likely to be already at the peak of its rate tightening cycle?
There still could be major headwinds, especially after what we've seen with the tensions in the Middle East and that's likely to affect oil prices, commodity prices, although they're coming off still remain quite high.
So, if none of these factors start coming down and becoming a bit easier for the house builders and those related to this industry, then Travis Perkins is likely to see its shares on the downside.
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