Travis Perkins shares sink after mortgage misery profit warning
Travis Perkins has slashed its profit guidance for the year, blaming a challenging market on the back of interest rate hikes.
The UK’s biggest house building supplier said it now expects operating profit now expected to be in the range of £175m to £195m, down from the £240m it predicted in August.
The firm’s share price took a 10 per cent knock in early trading as markets responded to the news.
In the third quarter group revenue for the firm declined by 1.8 per cent and like-for-like sales were also down by the same amount.
The company blamed the UK’s volatile housing market for the fall, as a period of elevated mortgage rates and wage stagnation has led to a slow down in the number of homes being bought.
According to Nationwide’s latest report on the market, house prices were unchanged over the month, but remained down 5.3 per cent year-on-year at around £14,500.
Travis Perkins joins a slew of other businesses in the property market which have been hindered by the ailing market.
In September, Barratt Developments warned customers struggling with mortgage affordability led to a 16.2 per cent slide in adjusted profit before tax for the full year to June.
Housebuilders have had a tumultuous time on stock markets this year, with rising interest rates – and therefore mortgage rates – reducing demand for new housing.
That in turn has seen developers rein in project starts in an effort to rebalance supply and demand and keep prices viable.