The impact of the slump in the UK house market reached a major FTSE boardroom today, as Travis Perkins, the UK’s biggest builders’ merchants chain, announced the departure of its chief executive.
Nick Roberts has run the 700-outlet firm for five years and becomes the biggest name so far to step down from a major UK company exposed to the slowdown.
Fewer people have been moving house amid 14 consecutive interest rate hikes from the Bank of England. They took base rates to a 16-year high of 5.25% by last August, where they remain. As mortgages became less affordable, momentum ebbed from one of the building trade’s main drivers of growth.
The FTSE 250 firm, which is also behind the Toolstation brand, issued a string of profit warnings over recent months, citing the impact on repair, maintenance and improvement (RMI) spending.
As the tills slowed down in line with developers reducing activity and fewer people doing up houses before and after moving home, Travis grappled with what it called a “progressive downturn in new build housing and private domestic RMI markets”.
Jasmine Whitbread, Travis; chair, said today : “The board fully recognises the under performance of the business over recent reporting periods, in the context of continued economic challenges and end market weakness.”
There was a sense in the City that the move would cause unease in sectors exposed to the downturn.
Tony Cross, at regulatory news database Investegate, it was “a senior boardroom casualty of the crisis that has been rocking the construction sector,” adding:
“Nick Roberts has now paid the price for the company’s continued underperformance, regardless of the poor macroeconomic backdrop. That has the potential to send a shockwave across other CEOs in the industry as even if interest rates are set to start falling soon.”
Travis met reduced its guidance for 2023 in numbers also today, reporting annual profit of £180 million .But forecasts for the year were cut in October from £240 million to a range between £175 million and £195 million.
The £1.5 billion company’s statement said “the board and Nick are aligned that now is the right time to search for a new leader to take the business forward”.
Roberts will stay on while a successor is found and said: “I will continue to rigorously execute on our plan and drive performance” in the meantime.”
Investegate’s Cross pointed out that there was an “inevitable lag” between falling interest rates and “uptick in construction activity”, which could leave more companies exposed, “giving shareholders a viable window to call for change.”
