Britain's Travis Perkins lowers 2024 profit outlook again
Shares fall more than 7% in early trade
Co sees early recovery signs, but expects growth to be slow
Adds share move in paragraph 2, analyst comment in paragraph 6
Oct 24 (Reuters) -Britain's largest buildings materials supplier Travis Perkins TPK.L lowered its annual profit outlook for the second time in three months on Thursday amid weakness in its merchanting business, sending its shares lower.
Shares in the FTSE 250 .FTMC firm, which had already declined more than 11% this year, fell as much as 7.3% to 855 pence in early trade.
Housing sector-related firms have been grappling with weak demand for over a year, with Britons squeezed by a cost of living crisis postponing home improvement projects and new construction activity slowing amid broader economic challenges.
"It is clear that the group has allowed itself to become distracted and overly internally focused which has led to the underperformance in recent periods," said CEO Peter Redfern, the former boss of homebuilder Taylor Wimpey TW.L who took the helm last month.
Redfern said his immediate priorities are driving branch-led performance and ensuring that the group turns and faces the anticipated recovery in the UK construction market.
Barclays analysts said the comments suggest the focus will be on execution, rather than more radical steps, which they believe is the right approach to address the issues the business has faced in recent years.
Travis Perkins reported a 5.7% drop in group revenue in the third quarter to end-September, with its merchanting segment, which sells building materials like wood and sand, seeing an 8.2% revenue decline on a like-for-like basis.
The company sees "some very early signs of recovery" in its main end markets but cautioned that this positive growth will be slow, with financial performance benefits materialising only by the second half of 2025.
The Northampton-based company expects 2024 adjusted operating profit of about 135 million pounds ($174.5 million), down from the 150 million pounds it indicated in August.
Travis Perkins, which spun off its home improvement business Wickes and sold its plumbing and heating division in 2021, said its loss-making operations in Toolstation France remained on track for full closure by year end.
($1 = 0.7735 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Eileen Soreng, Kirsten Donovan
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