A downturn in the house building market led to profits at Travis Perkins being slashed by £175m during its latest financial year.
The Northampton-headquartered company has reported pre-tax profits of £70m for 2023, down from £245m in 2022.
Revenue for the group, which also includes Toolstation, also declined from £4.994bn to £4.861bn over the same period.
In a statement issued to the London Stock Exchange, Travis Perkins said a “progressive downturn” in new build housing and private domestic repair, maintenance and improvement (RMI) markets contributed to its lower revenue.
It added that a combination of lower volumes, overhead cost inflation and “rapid” commodity price deflation in the second half of the year saw its profits cut.
As a result of its financial results, Travis Perkins said its dividend would total 18p per share, down from 39p in the prior 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 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.
“We have successfully acted to optimise our cost base and are actively addressing the impact of our loss-making businesses.
“We are also accelerating changes to our operating model, leveraging our scale to create a simpler, more efficient business. This will be achieved by simplifying our operational structures, consolidating our supply chain, creating shared procurement capability, and embedding new technology.
“While the timing of recovery in our end markets is uncertain, the long-term growth drivers of our industry remain robust.
“The proactive steps we are taking to rebuild profitability and strengthen our balance sheet will create a more resilient business and, together with our strong customer relationships and differentiated offer, will see the group well positioned to emerge stronger when markets recover.”
On its outlook, Travis Perkins said a recovery in the UK construction sector is “unlikely to gather any momentum” before the UK general election is concluded.
It added that the group’s customers are “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”.
The group added: “Mindful of these challenges, management is planning for another year of weak demand, with overhead and cash management actions supporting financial performance.
“Lead indicators and customer feedback will be closely monitored to inform further actions during the year.
“Pricing benefit is expected to be minimal in 2024 with lower timber pricing rolling over into H1 and limited manufacturer increases.
“Whilst it is still early in the trading year, the group has seen a continuation of the weak trading environment experienced in the second half of 2023.”
Travis Perkins said its management’s best estimate “at this stage” is that FY24 adjusted operating profit will be in the range of £160m to £180m, inclusive of around £10m of property profits and around £(20)m of losses in Toolstation France.