Travis Perkins expects more price inflation

Travis Perkins has predicted that price inflation will carry on throughout what it says will be a “challenging” 2023.

In its financial results for the year to 31 December 2022, the UK’s largest builders merchant said that, although inflation was moderating, it did not anticipate any “notable deflation” in manufactured products.

It said it therefore expected “mid to high single-digit percentage product-cost inflation” in the year ahead.

The company revealed that it spent £15m on a restructuring, including closing 19 branches and making 400 redundancies, during 2022, in anticipation of a slump in construction activity in the months ahead. Overall, this will save it £25m in 2023, it said.

Group turnover grew to £5bn in 2022, from £4.6bn in 2021. Its pre-tax profit was down to £245bn from £305.6bn in the prior year.

The results come as the Builders Merchants Federation said that the price of building materials had grown 16.2 per cent in 2022, despite the volume of materials sold falling 8 per cent.

As well as the restructuring, the merchant said its profit was hit by making less from its property sales than in previous years and the loss of two trading days due to extra bank holidays for the Queen’s Jubilee and funeral.

It also said the private domestic new-build, and repair, maintenance and improvement sectors were likely to be the worst hit.

Travis Perkins chief executive Nick Roberts said: “In the second half of the year we made some difficult decisions in response to the weaker trading environment and we continue to be watchful of market trends, working closely with our customers and suppliers to stay on the front foot.

“While it is early in the year and macroeconomic uncertainty remains, the combination of our diverse end-market exposure, appropriate cost actions and further market share gains driven by continued strategy execution, will enable the group to deliver another resilient trading performance in the year ahead.”