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MARKET REPORT: Travis Perkins in a hole as DIY boom fizzles out

Construction merchant Travis Perkins found himself in a bind after issuing a thinly veiled profit warning.

In its half-year results, the group said it expects to deliver a full-year performance “largely in line” with market expectations.

The phrase “broadly in line” is the city’s code for “not as good as expected,” and shares fell accordingly, by 9.3 percent, or 95.8 pence, to 934.2 pence.

MARKET REPORT Travis Perkins in a hole as DIY boom

Travis Perkins said it expects to deliver a full-year performance “largely in line” with market expectations

In the first half of 2022, the group achieved sales growth of 7.9 percent from a year earlier, but management warned that the exceptional trade enjoyed by its Toolstation business during the height of the pandemic has waned.

Homeowners have clearly knocked down tools and have chosen to move out of the house rather than spend time hanging shelves or polishing the bathroom.

Kingfisher, owner of the B&Q chain, fell 3.7 percent or 9.6p to 249.4p, and kitchen supplier Howden Joinery also went off the grid, falling 3.3 percent or 22.4p to 657.4p.

Homebuilders reacted negatively to the most recent Nationwide house price index, as the construction company noted “preliminary signs of a slowdown in activity” in the housing market in July.

Crest Nicholson Holdings, down 4.9 percent, or 13.8p, to 266.6p; Bellway, down 7.1 percent or 176p to 2288p and Taylor Wimpey, down 6.2 percent or 7.95p, at 120.05p were the hardest hit.

The FTSE 100 fell 0.06 percent or 4.31 points to 7409.11 and the FTSE 250 plunged 1 percent or 205.16 points to 19874.07.

Precious metal miner Fresnillo fell 2.2 percent, or 15.8p, to 712.4p after half-year results failed to shine. The commodities giant warned that the second half of the year is expected to see global supply chain bottlenecks and cost inflation will weigh on profits.

Profit in the first half of 2022 fell by almost two-thirds to £127 million, from £364.7 million a year earlier.

Biffa, which is surrounded by private equity, rose 11.3 percent, or 40.8p, to 401.6p on strong full-year results. Revenues in the 52 weeks to 25 March were up 41 per cent from a year earlier to £195 million.

The waste management company said the second half of its fiscal year saw a continued recovery from the impact of the pandemic, with full-year revenue growth of 22 percent compared to the year before.

The company has restored its dividend, but it may not be long before it continues to pay it as it is still in talks with private equity firm Energy Capital Partners about an acquisition.

Energy Capital, which made a cash offer of 445 pence per share in early June, is said to have made a firm offer or walk out today, but the “hang up or shut up” deadline has been extended to August 30.

Chemical company Synthomer, formerly known as Yule Catto, fell 11.4 percent, or 27.8p, to 207.2p as customers continued to stock their nitrile butadiene rubber (NBR) gloves after getting a little sloppy with orders in the wake of the pandemic .

Pre-tax profit fell to £114.7 million in the first half of 2022, from £272.4 million in the same period of 2021.

Another FTSE 250 chemical company, Elementis, experienced a happier time after it lifted its full-year outlook.

“While taking into account macroeconomic headwinds, the group’s financial performance is expected to be close to consensus expectations,” said the industrial coatings and personal care formulation specialist. This came after it posted an adjusted pre-tax profit of $53 million for the first six months of the year, up a third from $40 million in the first half of 2021.

Elementis shares were up 6.6 percent or 7.2p to 116.7p.

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