Travis Perkins shares fall nearly 3% as weak construction demand persists

Travis Perkins (LON:TPK) experienced a sharp decline in its shares by nearly 3% on Thursday, following the building materials supplier's announcement of a further decline in third-quarter revenue. This downturn was attributed to persistent weak construction demand, particularly in new-build housing within the UK. As of the trading update, shares were trading at 585.50 pence, a decrease of 1.43%, following a drop of 2.6% earlier in the session. The FTSE 100 remained relatively unchanged on the day.

The company highlighted its efforts towards higher-margin sales, cost discipline, and operational efficiencies, which were aiding in maintaining profitability despite the downward pressure on overall volumes. Despite this, Travis Perkins reported a decline in total revenue, with revenue falling 1.6% year-on-year and like-for-like sales declining 1.3% for the quarter ending on September 30. The company did not alter its full-year outlook in the trading update.

The Merchanting business, a key segment of Travis Perkins, reported a 2.2% decline in like-for-like revenue, as volumes decreased by 9.0%. However, price and mix adjustments provided a 6.8% offset, while network changes contributed to an additional revenue decline of 2.6%. The group emphasized that its Merchanting operations were emphasizing higher-margin trade and managing credit risk to counterbalance the effects of reduced volumes.

Travis Perkins maintained that it would continue to pass through input-cost inflation effectively. The company's subsidiary, Toolstation Benelux, faced the same challenges, with its like-for-like revenue declining by 4.7% and total revenue dropping by 3.8%. The group disclosed that it was evaluating opportunities arising from its ongoing strategic review to address the challenges faced by the business.

Travis Perkins expressed its ongoing commitment to implementing measures aimed at enhancing operating performance and generating free cash flow, all while preserving a sound financial position. The company indicated that it would provide further details on its strategy and operational priorities alongside its full-year results, slated for March 2027.