The chief executive of Travis Perkins, Gavin Slark, has issued a stark warning about imminent price increases for building materials across the UK construction industry. This alert comes as escalating conflict in the Middle East, particularly involving Iran, disrupts global oil and gas supplies, sending wholesale energy prices soaring.
Immediate Impact on Manufacturing Costs
Mr Slark revealed that over the past few weeks, the company has received notifications from numerous manufacturing suppliers about impending energy surcharges and price hikes. "In the last week or so, we've had communications from various manufacturing suppliers of ours saying they're looking at energy surcharges or they're looking at price increases to counteract energy rises," he stated in an interview with the Press Association.
He emphasized that for energy-intensive production processes, these cost increases translate rapidly into higher business expenses. "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," Slark explained.
A Delicate Balancing Act for Retailers
The Travis Perkins boss described the situation as a "balancing act," where the company must pass on cost increases fairly to customers while protecting its own financial position. "I think our customers understand that energy prices are rising significantly therefore the cost price of the materials will be rising," he noted, expressing hope for a swift resolution to the Middle East conflict to help stabilize pricing.
According to the Builders Merchants Federation, approximately 75% of building materials are manufactured within the UK. However, many of these domestic producers rely heavily on energy for processing materials like steel, oils, resins, and glass, making them particularly vulnerable to energy price fluctuations.
Transportation Costs Compound the Problem
Beyond manufacturing expenses, Mr Slark highlighted that rising road fuel costs could have the most significant impact on Travis Perkins' operations. With a substantial portion of their business involving product delivery to builders across the UK, increased transportation expenses present a major challenge.
While most products sold by the company are sourced domestically, Slark acknowledged that "some small products brought in from the Far East" could face additional pressure from higher shipping costs, creating a multifaceted pricing challenge.
Industry Context and Company Performance
The warning comes against a backdrop of declining building materials sales, with the Builders Merchants Federation reporting a 7.2% drop in sales volume in January compared to the same period last year.
Travis Perkins recently reported financial results showing a pre-tax loss of £134.7 million for 2025, widening from £38.4 million in 2024. However, on an adjusted basis excluding one-off costs, the company generated an operating profit of £133 million, representing a 12.5% year-on-year decrease.
Despite these challenges, the company's Toolstation brand demonstrated stronger performance with increasing revenues throughout the year. Investor response appeared cautiously optimistic, with Travis Perkins' share price rising more than 5% following the announcement.
Mr Slark concluded by emphasizing the company's vigilance regarding these market developments: "We're very alert to it and we're very aware of what the impact will be," underscoring the construction industry's vulnerability to geopolitical events affecting global energy markets.
