Travis Perkins PLC (LON:TPK) reported its second consecutive decline in annual earnings, blaming a “challenging environment” with weaker consumer confidence.
The UK’s biggest supplier of building materials said adjusted operating profit fell 7.1% to £380mln in 2017, missing analysts’ expectations of £384.8mln.
"2017 was a challenging year for the group, with continuing uncertainty in our end-markets, and declining consumer confidence throughout the year,” said chief executive John Carter.
Shares fell 8.7% to 1,309p in morning trade.
READ: Travis Perkins says on track to achieve full year expectations despite challenging market backdrop
Earnings were dragged lower by a decrease in profits in the plumbing and heating division and higher operating costs in the general merchanting and consumer businesses to improve customer propositions.
“Despite the challenging environment, we have continued to make disciplined investments in our customer proposition for the long term,” Carter said.
“Both the general merchanting and consumer divisions were held back by this investment in a higher cost base which ran ahead of volume growth.”
Travis Perkins to slow investment in non-priority areas
However, Carter said the company would slow investment in non-priority areas this year and focus on maintaining tight control of costs as it expects the mixed market backdrop to continue.
The group expects its 2018 performance to be similar to last year.
Last year the company was hit by a sharp rise in cost price inflation, driven by a weaker pound following the Brexit vote.
While price pressures eased in the second half, adjusted operating margins for the year fell by 80 basis points to 5.5% on the back of increased investments.
Revenue rose 3.5% to £6.4bn while like-for-like revenue grew 3.3%, accelerating from the 2.7% increase reported in 2016.
The company raised its dividend by 2.2% to 46p each.
Travis Perkins trades from more than 20 businesses including Travis Perkins, Wickes, BSS, Toolstation and City Plumbing. Its customers include building firms, local authorities, traders and regular customers.