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Britain's Travis Perkins to close branches as warns on 2016 profit

Chris Ratcliffe | Bloomberg | Getty Images

Travis Perkins, Britain's biggest supplier of building materials, warned on full-year profit on Wednesday, blaming a poor performance in its plumbing and heating division which will now be reviewed.

The group, which trades from over 20 businesses, including Travis Perkins, Wickes, BSS, Toolstation and Tile Giant, also highlighted uncertainty in the outlook for 2017.

Travis Perkins' fortunes are closely tied to housing transactions and consumer confidence. Its customers range from big building firms to sole traders such as plumbers and kitchen fitters as well as consumer DIYers.

It plans to close more than 30 branches, affecting 600 employees, and make its supply chain more efficient, resulting in an exceptional charge of 40 million to 50 million pounds ($49-$61 million) in 2016.

Core earnings for 2016 would be "slightly below" the current market consensus of 415 million pounds ($509 million).

"It is still too early to predict customer demand in 2017 with certainty and we will continue to monitor our lead indicators closely," said Chief Executive John Carter.

Last month rival heating and plumbing products supplier Wolseley said it planned to close about 10 percent of its UK branches in response to tough competition and weak trading, a move that could lead to up to 800 job losses.

Travis Perkins said underlying sales in its plumbing and heating division fell 4.1 percent in the third quarter.

It blamed weak demand, changing customer buying behaviors and the impact of previous government boiler replacement incentive schemes which had brought sales forward.

"The operations of the division will be fully reviewed and the outcome of the review and any associated costs will be communicated in 2017," it said.

Travis Perkins' total group sales rose 3.4 percent in the third quarter, with like-for-like sales up 2.0 percent.

Shares in the firm, down a quarter so far this year, closed on Tuesday at 1,488 pence, valuing the firm at 3.7 billion pounds.

In August Travis Perkins had warned that Britain's vote to leave the European Union had created "considerable uncertainty" in the outlook for the building supplies market, with sales slowing in July.