A warning from Travis Perkins (TPK) about declining demand has given investors post-Brexit jitters, prompting the share price to fall 3.1% to £14.96.
The company says the EU referendum has created significant uncertainty with weaker demand in the run up to and immediately after the historic vote.
Travis Perkins says further uncertainty may hit renovation, maintenance and improvement, as well as new construction and infrastructure spending.
The negative outlook overshadows what look like reasonable half year results on paper, even though they are slightly below expectations.
Pre-tax profit has risen 10.7% to £176 million, up from £159 million in the first half of 2015, despite sales in plumbing and heating division being impacted by tough trading conditions.
Adjusted operating profit has increased by 4.9% to £194 million and the interim dividend has been hiked to 15.25p per share.
Liberum believes Travis Perkins is well placed to withstand the upcoming downturn as a result of its strong balance sheet and ability to adjust costs.
However, investors should be cautious about Travis Perkins as management has suspended its guidance for this year due to uncertainty and volatility, particularly in the housing sector.
Davy Research is more downbeat about the firm’s performance, noting the gradual improvement, but believes the stock will struggle to perform in the current environment.
