Building materials firm CMO warns over profits amid construction woes

CMO said underlying earnings are now expected to plummet to around £1 million – less than half the £2.1 million notched up in 2022.

Online building materials supplier CMO has warned over annual earnings (Andrew Milligan/PA) (PA Archive)

Online building materials supplier CMO warned over annual earnings as it said economic uncertainty continues to hit the construction and home repairs sector.

Plymouth-based CMO, which claims to be the UK’s largest online-only retailer of building materials, said orders had been lower than usual at the end of 2023 as homeowners shifted towards less profitable smaller building and repair projects.

Sales for the full year are expected to fall 14% to around £71.5 million, roughly as expected, but the company warned that underlying earnings are now expected to plummet to around £1 million – less than half the £2.1 million notched up in 2022.

In August, it had guided for underlying earnings of around £2.5 million.

With macro-economic headwinds continuing to impact the construction sector, we proceed with caution for the outlook for 2024, but remain confident in our model and strategy to take the business forward, and our ability to deliver profitable progress

Dean Murray, CMO Group

Chief executive Dean Murray said: “With macro-economic headwinds continuing to impact the construction sector, we proceed with caution for the outlook for 2024, but remain confident in our model and strategy to take the business forward, and our ability to deliver profitable progress.”

But CMO said that, despite the disappointing last quarter, it had successfully delivered on some key strategic priorities, including improving product margins and carriage cost control.

Britain’s construction sector has been under pressure after interest rates have been raised to levels not seen since the 2008 financial crisis, with the Bank of England pushing through 14 increases in a row until finally pausing in September last year.

Housebuilders have been hit hard, with many of the big players issuing profit warnings last year, as rising mortgage costs saw demand slump in the property market.

Figures from a closely-watched industry survey last week signalled that the construction sector is still in contraction.

The S&P Global/CIPS construction purchasing managers’ index scored 46.8 in December, up from 45.5 in November.

Any score that is lower than 50 means that the sector is contracting.

But while 46.8 still represents a fairly rapid decline, it was the best reading since September and marginally better than expected.