By Paul Sandle
LONDON (Reuters) -Travis Perkins, Britain's biggest supplier of building materials, said tough conditions in the new-build and renovation markets would not ease in the short term, even as inflation moderates and prices start to fall for commodities like timber.
The company, which serves the trade through its merchant businesses like Travis Perkins (LON:TPK) and BSS, as well as Toolstation, reported a 31% drop in first-half operating profit in a "challenging" market.
Chief Executive Nick Roberts said near-term trading was expected to remain difficult as persistent consumer inflation and higher mortgage rates impacted people's confidence to undertake work.
The company downgraded its full-year profit forecast to 240 million pounds in June after it was hit by significant weakness in the new-build and private domestic renovation markets.
Roberts said the company had expected demand to return as inflation abated from the second quarter onwards.
"That anticipated volume return didn't materialise, particularly in new house building," he said in an interview on Tuesday, adding that he had seen no change in demand for renovations since the downgrade.
However, he said areas such as infrastructure, commercial, industrial and public sector were resilient.
Toolstation was performing better after a difficult 2022, he said, gaining market share through a focus on its trade offer.
Shares in Travis Perkins, which have fallen 15% in the last 12 months, rose 3.4% to 900 pence.
The company said price inflation was still elevated but it was starting to moderate.
"There's still inflation, but we haven't seen any further inflation in key manufactured products since January this year," Roberts said. "In some categories, particularly commodity categories like timber, we are seeing some deflation, and we're working hard to ensure that our customers benefit from that."
The company reported adjusted operating profit of 112 million pounds on revenue of 2.47 billion pounds, down 2.5%, for the period. It maintained its interim dividend at 12.5 pence.
($1 = 0.7798 pounds)