Travis Perkins sank after it warned a housing market slowdown is hitting earnings.
In an unscheduled trading update, the FTSE 250 building materials firm said the “resilient performance” it delivered in the first three months of the year has taken a turn for the worse since April as rising interest rates began to bite.
It highlighted how volumes in the markets for new homes and private home repairs, maintenance and improvements were depressed by more expensive mortgages and weaker consumer confidence.
As a result, Travis Perkins warned it was likely to make around £240 million in profit this year.
That would be less than the £272 million analysts had expected and £55 million less than in 2022.
Sign of the times: Travis Perkins warned it was likely to make around £240m profit this year, less than the £272m analysts had expected
Russ Mould, director of investment at realtor AJ Bell, said: “During the pandemic, countless households have spent the money to refurbish their properties.
“Unfortunately, we’ve gotten to the point where interest rates have risen so fast that many homeowners can no longer afford home improvement projects.”
Shares took a hit, falling 6.7 percent, or 58.2p, to 808.6p.
That led to an industry-wide sell-off, with Marshalls falling 5.1 percent, or 14p, to 262p, Kingspan losing 2.6 percent, or 1.68p, to 62.33p, and Grafton Group falling 3.6 percent , or 30.5p, to 819.7p.
Despite the gloomy outlook for the UK housing sector, the London stock market ended the week on a positive note. The FTSE 100 was up 0.2 percent, or 14.46 points, to 7642.72 and the FTSE 250 was down 0.05 percent, or 8.52 points, to 19030.89.
Mike Ashley’s fashion empire tightened its grip on AO World. Frasers Group increased its stake in the online electricity giant for the second time this week.
The company, which owns brands such as Sports Direct, Jack Wills and Flannels, took an 18.9 per cent stake worth £75 million on Monday after buying shares of Odey Asset Management.
The retail group has now become the largest shareholder after increasing its stake to 21.33 percent, according to a stock market filing published yesterday. Ashley also increased his stake in Asos to more than 10 percent this week as the fast fashion brand returned to profit.
The city is speculating whether Asos, now a takeover target, will become the latest retailer to be gobbled up by Frasers Group.
Shares in AO World fell 0.4 percent, or 0.35p, to 80.8p, Asos fell 1.6 percent, or 6p, to 370.4p, and Frasers Group gained 1.9 percent, or 13p, to 697p. Another electronics retailer was on the move as Currys began a strategic review of its Greek company Kotsovolos.
The company said the outcome could include a sale of the business. Shares fell 0.9 percent, or 0.45 pence, to 51.15 pence.
Peel Hunt spoke of a “gradual improvement” in the M&A pipeline since April.
But the City stockbroker posted a £1.5m loss in the year to the end of March, having posted a £41.2m profit 12 months earlier. And sales fell 37.2 per cent to £82.3 million.
It said the fiscal year that had just ended was impacted by the government’s “disastrous mini-budget” last September and the war in Ukraine.
Peel Hunt added that both events boosted investor confidence and meant the IPO market was “effectively closed.” Shares fell 1.5 percent, or 1.5 pence, to 100.5 pence.
Darktrace shares rose after HSBC maintained its buy rating for the Cambridge-based cybersecurity firm.
The broker said the group’s results in mid-July could provide an update on its investigation into New York shortseller Quintessential’s allegations earlier this year. Shares rose 13.2 percent, or 40.5 pence, to 347.3 pence.
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