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Travis Perkins warns on profit in sign of UK housing market difficulty
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LONDON (Reuters) -Travis Perkins, Britain’s biggest supplier of building materials, warned profit would be hit by difficulties in the country’s housing market in one of the latest warning signs that rising interest rates are beginning to be felt by consumers.
LONDON (Reuters) -Travis Perkins, Britain’s biggest supplier of building materials, warned profit would be hit by difficulties in the country’s housing market in one of the latest warning signs that rising interest rates are beginning to be felt by consumers.
Travis said that the jump in mortgage rates and ongoing high levels of inflation meant that the construction industry was holding back in building new homes and Britons were delaying extension projects and refurbishment of existing properties.
For 2023, Travis said it now expected full-year adjusted operating profit to be around 240 million pounds ($307 million), a downgrade from guidance in April when it said it was on track to meet market forecasts of about 272 million pounds.
British households have so far proven surprisingly resilient to sharp hikes in the prices of everyday goods and the rapid rise in interest rates that have lifted the cost of mortgage loans, but there is evidence that is starting to change.
Stubbornly high inflation means lenders have in recent weeks repeatedly re-priced home loan offerings, spurred by expectations for more interest rate hikes from the Bank of England.
Worries over higher mortgages now appear to be feeding through to the housing market, with Travis saying that the volumes in new build housing and private domestic building projects were lower.
Travis said the other half of its business, which serves large commercial and public infrastructure projects, however, was seeing resilient demand.
($1 = 0.7817 pounds)
(Reporting by Sarah Young in London and Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Kate Holton)
The housing market refers to the supply and demand for residential properties, including buying, selling, and renting homes. It is influenced by various factors such as interest rates, economic conditions, and consumer confidence.
Interest rates are the cost of borrowing money, expressed as a percentage of the total loan amount. They can affect consumer spending, investment, and overall economic activity.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
A profit warning is a statement issued by a company indicating that its profits will be lower than expected. This can impact investor confidence and stock prices.
The construction industry encompasses all activities related to the building and renovation of structures, including residential, commercial, and infrastructure projects. It is a key sector in the economy.
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