Travis Perkins “cautious” due to mixed market signals

Group adjusted pre-tax profits were £381m for 2016, near identical to 2015, but exceptional non-cash impairment charges of £235m and £57m contributed to pre-tax profits coming in lower at £73m.

The macroeconomic outlook of the UK is mixed,” said John Carter, Travis Perkins plc’s CEO.

“The sharp decline in the value of Sterling since June 2016 has created cost pressures on imported goods and materials, and the expectations for secondary housing market transactions and growth in the RMI market have weakened.”

In its annual statement the group said it anticipated that pressure on consumer discretionary spending from rising inflation could impact secondary housing transactions in the second half of 2017.

“Fewer housing transactions will have a direct impact on merchant sales volume, albeit with a lag.”

It believes potential volume reductions in 2017 will be broadly offset by price inflation.

“Given the mixed outlook for the Group’s end markets, the Group has adopted a cautious stance until end market demand becomes clearer.”

Travis Perkins said the Brexit vote had caused considerable market uncertainty and resulted in a significant weakening of sterling against the US dollar and the Euro, the currencies used by the Group to purchase imported goods.

“The effect on the group’s operations are unlikely to become clear until full details emerge about how the UK will seek to engineer its exit from the EU and the EU responds.”

The general merchanting division recorded an adjusted operating profit of £207m in 2016, up 4%, while the consumer division’s adjusted operating profits grew 6.3% to £101m for the year, with a further 46 new Wickes stores opening in 2016.