Building materials supplier Grafton Group Plc said speculation around the upcoming UK budget — and the potential impact on the country’s property market — makes a meaningful recovery of the home improvement market unlikely.
“Sadly from an industry perspective, the various rhetoric that we’re seeing at the moment around taxes, wealth taxes, particularly aimed at property, are unhelpful,” Chief Financial Officer David Arnold said. “That makes us a little bit more cautious until we get to the budget and we actually see what the intentions of the chancellor are.”
UK Chancellor Rachel Reeves is set to deliver a crunch budget on Nov. 26, in which economists predict she may need to raise taxes. Investors, meanwhile, are concerned about the government’s ability to keep its financial house in order without hobbling the economy.
A meaningful recovery of volumes in the UK home improvement market is “unlikely” this year, particularly as a result of recent speculation around property taxes, Grafton said in a Thursday statement. While there’s been some recovery in price inflation, overall volumes are likely to remain flat, Arnold said.
That echoes commentary from building materials supplier Marshalls Plc and Genuit Group Plc which both said they expect challenging conditions to persist in the second half of the year.
“We don’t expect market volumes to really pick up much and, and at this point I think uncertainty is sort of normal right now,” CEO Joe Vorih told Bloomberg after the company reported results last month.
UK consumers remained subdued in August as rising prices threated to eat into household budgets, a survey by the British Retail Consortium showed.
Grafton, which operates across several markets including the UK, Ireland and the Netherlands, saw an easing of trading momentum toward the end of May and into June, but the start of the second half has seen a return to growth of like-for like revenue. In the first half, UK Distribution returned to profit growth for the first time since 2021.
Shares rose as much as 5% after reporting half-year results, before paring some of those gains. The stock is up 1.7% at 10:07 a.m. in London.
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