Iran war to drive up building costs, warns Travis Perkins boss
The boss of the UK’s largest builders’ merchant has warned building costs are poised to rise as suppliers warn they are facing soaring energy costs.
Gavin Slark, the new boss of Travis Perkins, said the conflict in the Middle East and the resulting spike of energy prices will force manufacturers to put up prices to deal with higher bills.
He said: “I think our customers understand that energy prices are rising significantly therefore the cost price of the materials will be rising.”
Slark said several of Travis Perkins’ suppliers have contacted the firm to say they are considering hiking prices to combat energy costs, which many businesses fear will rise when they renew their contracts.
He told the Press Association: “If you’re very energy intensive then it’s a short-term pricing issue and it happens very quickly in terms of the price hitting your business.
“We’re very alert to it and we’re very aware of what the impact will be.”
The trade body for builders has also warned that sales in construction supplies began to slump even before the conflict broke out.
Construction ‘not taking place’
Building material sales fell by 7.2 per cent year-on-year to January, as costs are already 40 per cent higher than they were before the Covid-19 pandemic, according to the Builders Merchants Federation (BMF).
John Newcomb, the BMF’s chief executive, said: “If building materials are not being sold, construction is not taking place.
“We are facing a major ‘cost of doing business’ crisis, and there are no green shots of recovery on the horizon.”
The Labour government has pledged to build 1.5m homes before the next general election, but multiple sections of the construction industry have warned these targets are infeasible.
Earlier this month, the boss of a leading materials supplier said the target was impossible “the day it was announced,” and called on the government to back the UK’s construction industry, which is seeing falling sales.
Small and medium construction firms have warned they are in an “existential crisis” as average sales dropped more than 40 per cent between 2021 and 2025.
Travis Perkins saw its pre-tax loss balloon to £135m, more than tripled from a £38m loss the year before, as revenue fell by one per cent.
The company said it has invested in a turnaround over the past year, implementing a new IT system and slashing administrative overheads.
The firm’s new chief executive said: “We will maintain our disciplined and selective approach to capital allocation as we navigate our way back to better market conditions.”