* Warns 2016 core earnings to miss analysts' consensus
* Plumbing and heating sales fall in Q3
* Says demand outlook for 2017 uncertain
* To close 30 branches, 600 jobs could go
* Shares fall by as much as 8 pct
(Adds detail, CEO, analyst comment, shares)
By James Davey
LONDON, Oct 19 Travis Perkins, Britain's
biggest supplier of building materials, said on Wednesday it
would miss 2016 profit forecasts and predicted a tough 2017,
blaming weak demand and uncertainty created by Britain's vote to
leave the European Union.
Shares in the group, which trades from over 20 businesses
including Travis Perkins, Wickes, BSS, Toolstation and Tile
Giant, fell as much as 8 percent, taking their losses for the
year to over 30 percent.
The group's customers range from big building firms to sole
traders such as plumbers and kitchen fitters as well as
consumers, with its fortunes closely tied to housing
transactions and consumer confidence.
"What Brexit has created is a degree of uncertainty in both
those areas - both in how many people are going to move homes
and what will be the degree of consumer confidence," Chief
Executive John Carter told Reuters.
"Many businesses in walks of life other than building
materials are also finding it difficult to predict what does
Brexit actually mean?"
The firm said it would close 10 small distribution centres
and 30 of its 2,060 branches, threatening 600 jobs. That, and
other moves to make its supply chain more efficient would mean
an exceptional charge of 40-50 million pounds ($49-$61 million)
Core earnings for 2016 would be "slightly below" the current
market consensus of 415 million pounds. Core earnings were 413
million pounds in 2015.
"It is not easy to understand whether softness is due to
uncertainty around the EU referendum and its after-effects or a
sign of more fundamental weakness," said Liberum analyst Charlie
Campbell who has a "buy" rating on the stock.
Travis Perkins said underlying sales in its plumbing and
heating division fell 4.1 percent in the third quarter ended
It blamed weak demand, partly due to previous government
boiler replacement incentive schemes which brought sales
forward. The division's future will now be reviewed, though
Carter said it was too early to say if the group would look to
sell some businesses.
"There is an over-capacity of branches," he said, pointing
to recent restructurings announced by rivals Wolseley
The plumbing and heating division accounts for just under a
quarter of Travis Perkins' revenue and just under 10 percent of
Total group sales rose 3.4 percent in the third quarter,
with like-for-like sales up 2.0 percent.
"I've got three other divisions (general merchanting,
consumer and contracts) doing really well that add up to 90
percent of my profits," said Carter.
The CEO added import costs, both of raw materials and of
finished product, were likely to start increasing in 2017 due to
the weaker pound, as currency hedges unwind.
($1 = 0.8157 pounds)
(Editing by Louise Heavens and Mark Potter)