Housing slowdown hits Travis Perkins profits

Travis Perkins sank after it warned a slowdown in the housing market is hitting profits.

In an unscheduled trading update, the FTSE 250 building supplies firm said the ‘resilient performance’ it delivered in the first three months of the year has taken a turn since April as rising interest rates started to bite.

It highlighted how volumes in the newbuild housing and private domestic repairs, maintenance and improvements markets were being dragged down by more expensive mortgages and weaker consumer confidence.

As a result, Travis Perkins warned it was likely to make around £240m of profit this year.

That would be below the £272m analysts had expected and £55m less than it made in 2022.

Russ Mould, investment director at broker AJ Bell, said: ‘During the pandemic, countless households splashed the cash to do up their property.

‘Sadly, we’ve got to the point where interest rates have gone up so much, so fast, that many homeowners can no longer afford home improvement projects.’

Shares took a hit, falling 6.7 per cent, or 58.2p, to 808.6p.

That sparked a sell-off across the industry, with Marshalls down 5.1 per cent, or 14p, to 262p, Kingspan shed 2.6 per cent, or 1.68p, to 62.33p and Grafton Group slid 3.6 per cent, or 30.5p, to 819.7p.

Despite the gloomy outlook on Britain’s housing sector, the London stock market ended the week on a positive note. The FTSE 100 edged up 0.2 per cent, or 14.46 points, to 7642.72 and the FTSE 250 inched down 0.05 per cent, or 8.52 points, to 19030.89.

Mike Ashley’s fashion empire tightened its grip on AO World. Frasers Group increased its stake in the online electrical giant for the second time this week.

The firm, which owns brands such as Sports Direct, Jack Wills and Flannels, on Monday snapped up an 18.9pc stake worth £75m after it bought out the shares held by Odey Asset Management.

The retail group has now become the top shareholder after it raised its holding to 21.33 per cent, according to a stock market filing published yesterday. Ashley this week also took his stake in Asos to over 10 per cent as the fast fashion brand returned to profit.

The City is speculating whether Asos, now a takeover target, will become the latest retailer to be gobbled up by Frasers Group.

Shares in AO World slid 0.4 per cent, or 0.35p, to 80.8p, Asos fell 1.6 per cent, or 6p, to 370.4p and Frasers Group gained 1.9 per cent, or 13p, to 697p. Another electrical retailer was on the move as Currys began a strategic review into its Greek business Kotsovolos.

The business said the outcome could involve a sale of the operations. Shares slid 0.9 per cent, or 0.45p, to 51.15p.

Peel Hunt cited a ‘gradual improvement’ in the merger and acquisitions pipeline since April.

But the City stockbroker made a loss of £1.5m in the year to the end of March, having raked in a £41.2m profit 12 months earlier. And revenue plunged 37.2 per cent to £82.3m.

It said its financial year that had just ended was affected by the Government’s ‘disastrous mini-Budget’ last September and the war in the Ukraine.

Peel Hunt added that both events hit investor confidence and meant the IPO market had been ‘effectively closed’. Shares sank 1.5 per cent, or 1.5p, to 100.5p.

Darktrace shares rallied after HSBC maintained its ‘buy’ rating on the Cambridge-based cybersecurity firm.

The broker said the group’s results in mid-July could provide an update on its investigation into the allegations made by the New York short-seller Quintessential earlier this year. Shares soared 13.2 per cent, or 40.5p, to 347.3p.