Lords Group Trading PLC (AIM:LORD), the building materials supplier, sank more than 12% on Thursday after it warned a “challenging backdrop” was expected to lead to falling profits and revenues for the remainder of the 2023 financial year.
Full-year revenue forecasts have been cut to £450 million, while underlying profits are now expected to reach £27 million, the group revealed in its interim results.
High levels of inflation, increasing interest rates and weaker consumer confidence are all driving forces in the decrease in demand for the London-listed firm’s private repairs, maintenance and improvements (RMI) division.
Shanker Patel, chief executive officer of Lords, said: “The board is still mindful of accumulating short-term macroeconomic conditions to which the group is not immune and expects trading conditions to be more challenging in the second half of the year against strong comparators.
“However, we anticipate Lord's agility, entrepreneurialism and strong positioning will enable the group to deliver its strategic target of £500 million revenue by 2024 and EBITDA margins of 7.5% in the medium term."
As mortgage rates continue to remain stubbornly high, the dampening of the housebuilding sector–seen through Persimmon’s relegation from the FTSE 100 – has meant sales of housing materials at Lords is expected to stagger throughout the year.
Revenues in the first half of the 2023 dropped by 4.4% of a like-for-like basis to £222.6 million, while underlying profits lifted by 6.1% coming in at £15.1 million on a 6.8% EBITDA margin.
Lords opened trading at around 62p on Thursday and is down around 27% year-to-date.