Travis Perkins, the UK builder’s merchant, took it on the chin today after releasing its third quarter trading statement.
The supplier of building materials to the construction industry said that total group turnover for the nine months to the end of September was up 3.3% on the same period in 2007, but that the Company had noticed a further softening in demand in recent weeks. A number of listed companies on the London Stock Exchange have reported a further deterioration in trading and sentiment in recent weeks, so while Travis Perkins update clearly concerned the market, it was not out of line with general sentiment of many companies reporting recently.
Travis Perkins now expects to report profits before tax at the low end of market expectations. The company also announced a £65 million cost cutting drive, a cutback in its planned capital expenditure program, and warned that it was unlikely to recommend a final dividend payment.
“Also, the Group is evaluating the requirement to incur non-recurring charges reflecting the impact of the deteriorating trading environment. This impact includes reorganisation costs stemming from the actions being taken to reduce costs and a potential reduction in the holding value of certain assets,” the company stated.
“We expect to continue to gain like-for-like market share, to manage gross margin actively and to apply cash generated to reduce borrowings. Nevertheless, we believe it is prudent to take early, more extensive action, in view of the steeper decline in construction activity that is now materialising. These actions are aimed at strengthening the Group's financial and trading flexibility in more challenging markets.”