The company’s full year 2023 financial report, released on March 5, shows that the business saw a 39% reverse in adjusted operating profits in 2023 to £180m (2022: £295m), while revenue decreased 2.7% to £4.86bn.

“Ongoing economic challenges have significantly impacted our trading performance, driven by weakness in the new build housing and domestic RMI sectors, and compounded by deflationary pressures on commodity products,” said Nick Roberts, Travis Perkins CEO.

“With market conditions expected to remain a headwind through 2024, the business is fully focused on improving profitability and enhancing cash generation. We have successfully acted to optimise our cost base and are actively addressing the impact of our loss-making businesses. 

“While the timing of recovery in our end markets is uncertain, the long-term growth drivers of our industry remain robust.”

The company said a recovery in the UK construction sector is unlikely to gather any momentum before the UK general election is concluded. The Group’s customers, large and small, are 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.

“Mindful of these challenges, management is planning for another year of weak demand,” the company said. 

“Pricing benefit is expected to be minimal in 2024 with lower timber pricing rolling over into H1 and limited manufacturer increases.”

Around £64m of the adjusted profit decline resulted from lower sales volumes while approximately £24m was attributable to lower gross margins, with deflation on timber products in the second half a significant contributory factor.

The first phase of the Group’s cost savings programme, completed in the fourth quarter, will deliver further cost savings of around £35m in 2024, primarily from a reduction in central and regional headcount and the closure of the Toolstation Bridgwater distribution centre.

The next phase commenced in February 2024 will see 39 standalone Benchmarx branches closed as part of a review of the strategy of the business.

In March 2024 the Group announced the proposed closure of the Toolstation Daventry distribution centre which represents the next stage of supply chain consolidation within Toolstation UK.

Toolstation made good progress during the year with 6.6% sales growth demonstrating the businesses’ ability to win share in difficult markets. Revenue grew to £823m, with UK adjusted profit up 9.5% to £23m.