Equities Update: Travis Perkins, IHG…

Travis Perkins still facing challenges as profits slump 

Mark Crouch, Market Analyst at investment platform eToro, said: “Travis Perkins was galvanised by Labour’s election win with their share price jumping by 25% in July. However, the honeymoon period looks to have been short lived as the reality of the challenges facing the business have come flooding back into view.

“The UK’s largest supplier of building materials has suffered a steep drop in profits in the first half of 2024 after demand for housing and building supplies continues to wane. And while Travis Perkins has substantially improved operational effectiveness and its overheads within the business, market conditions are making things increasingly difficult. 

“Despite glimpses of positive data starting to emerge to suggest housing is on the up again, higher interest rates and the cost-of-living crisis still weigh heavily on consumers.

“The Bank of England’s decision to cut rates was a welcome one, but it’s unlikely to have a meaningful impact. With economic warning lights beginning to flicker, it doesn’t bode well for a sector that was hoping for a rejuvenated year, suggesting things might get worse before they get better for Travis Perkins.”

Travel Bounce Back Continues as IHG Revenue Grows

Adam Vettese, Market Analyst at investment platform eToro, said: “Intercontinental hotels is continuing to show that global travel demand is bouncing back, announcing overall revenue per room has increased. The key Americas market has shown some resurgence after a softer performance last quarter. China remains a tricky one as post-pandemic travel hasn’t quite normalised in the region and that is reflected in IHG’s performance there.

“The company continues to integrate its acquisitions with the rebranding of Novum group hotels having kicked off in Germany. They are also on track to return over $1bn to shareholders in a combination of a dividend which has been hiked by 10% and their $800m buyback scheme, which they are around halfway through so far.

“Shares had performed very well this year up until this past week where the global sell-off we have seen saw IHG pare some of those gains. The stock is trading almost 10% lower than it was all but a week ago.”