The UK construction sector is unlikely to see any serious recovery until after a government is installed following the election expected later this year, Travis Perkins has said.
The seller of construction products said that its customers are waiting to see if a potential new government will announce any support for the sector and where interest rates will go.
“A recovery in the UK construction sector is unlikely to gather any momentum before the UK general election is concluded with the group’s customers, large and small, inevitably waiting to see if there is a post-election government stimulus package for the sector and also seeking clarity on the future direction of interest rates,” it said on Tuesday.
It comes as the country is widely expected to go to the polls some time this year. The Government has to hold an election before January 28, 2025.
Travis Perkins also said that it was planning to possibly exit its French Toolstation business, which has 51 shops across the country.
The French business is suffering from long-term challenges, including building awareness of the brand in the country, serving less populated regions and weak demand.
“Taking these factors into consideration, and with forecast losses expected to increase to £20 million in 2024, management has concluded that the investment required to reach profitability is no longer sustainable and today confirms that it is working on a plan for a potential exit of the business,” the business said.
The business said that it is also going to review its options for Toolstation Benelux, which has 119 shops.
The Benelux business made a loss of £19 million last year, up from £15 million the year before, even though sales grew 11%.
Overall, Travis Perkins said that revenue dipped 2.7% to £4.9 billion. Pre-tax profit went from £245 million to £70 million.
Adjusted operating profit was down 39% to £180 million. Travis said that £24 million of that reduction was due to a drop in gross margins, largely thanks to falling prices for timber products in the second half of the year.
Chief executive Nick Roberts said: “Ongoing economic challenges have significantly impacted our trading performance, driven by weakness in the new build housing and domestic RMI (repair, maintenance and improvements) sectors, and compounded by deflationary pressures on commodity products.
“Faced with these challenges, we have invested to protect and build our leading market positions.
“With market conditions expected to remain a headwind through 2024, the business is fully focused on improving profitability and enhancing cash generation.”