Poor prospects for 2012

Published:  02 August, 2011

NORTHAMPTON: The construction recovery is being held back by austerity measures says Travis Perkins.

Travis chief executive Geoff Cooper says government cutbacks, tax increases and low consumer confidence which hurt trading in the second quarter will continue to drag recovery in the construction industry.

Mr Cooper expects Travis to outperform competitors but he anticipates trade overall worsening in 2012 as global macro headwinds batter the UK.

"The level of uncertainty globally has risen with the Greek debt crisis, and now concerns about what is happening in the US," Cooper told Reuters.

"That's something we've got to worry about and I'm sure there will be impact on the UK economy," he said after Travis Perkins posted a 26% rise in first-half profit.

Cooper has also detected caution among its builder customer base beyond the summer. "They're telling us that there's going to be quite a rush of work in the summer," he said.

"A lot of that is repair programmes that have been brought forward, where previously a new-build programme was going to be launched in the public sector but now isn't (because of government cuts).

"But further out, builders haven't got as much work on as they had previously, so our market intelligence tells us that we probably need to be a bit more cautious about next year rather than this year."

Cooper said he expected Travis Perkins to outperform an overall UK merchanting market he anticipates will be flat in volume terms in 2011 and an overall DIY market he expected to fall by a "high single digit" percent.

Following the recent administrations of Focus DIY and Moben Kitchens, he expects further consolidation in its markets, particularly in merchanting.

On Friday a survey said British consumer confidence fell in July towards a two-year low seen earlier this year, stoking concern cash-strapped UK consumers will continue to cut spending and hamper a fragile economic recovery.

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