- FY profit down 16%
- Sees 2023 profit lower
- Shares down 5%
LONDON, Feb 28 (Reuters) - Travis Perkins, Britain's biggest supplier of building materials, warned of a challenging 2023 as housebuilders slow down projects and home-owners delay improvements due to the country's gloomy economic outlook.
Travis Perkins, which sells bricks, timber and new kitchens, as well as equipment for large construction projects, said adjusted operating profit fell 16% last year to 295 million pounds ($355 million), behind a consensus forecast of 320 million pounds.
The miss was blamed on restructuring costs from closing 20 smaller branches out of the group's 1,500, which Chief Financial Officer Alan Williams said was part of Travis Perkin's plan to prepare for a tougher year.
Shares in the 200-year old group fell 5% to 993 pence in early trading.
Britain's overall construction market is expected to shrink about 5% to 7% this year in volume terms, and Travis Perkins said this would hit its 2023 profit, which is currently forecast to fall by 6% from last year's level.
The weakness will come as housebuilders start to slow down projects as fewer people buy new homes, due to concerns about the economy and the jump in borrowing costs, which now stand at 4%, their highest since 2008.
That also deters home-owners from carrying out big improvement projects like building an extension or fitting a new kitchen or bathroom.
The bright spot, said Williams, was in public sector projects such as hospital and school building and social housing sectors.
"We're still seeing a lot of refit projects post the pandemic throughout the UK," he said, explaining that many offices were being updated to suit more flexible working patterns.
Travis Perkins expects inflation for the building goods it sells to moderate to about 5-8% this year, compared to a rise of about 15% last year.
Williams said bricks had been one of the worst affected products, with their prices rising 50% over the last 18 months, while plasterboard had risen 30%.
($1 = 0.8306 pounds)
Reporting by Sarah Young, Editing by Kylie MacLellan and Shron Singleton