Shares in Travis Perkins fell in morning deals after the building materials group beat first-half expectations but issued a cautious outlook on the back of recent interest rate rises.

In early trading, Travis Perkins shares were down 62p, or about 3 per cent, at 1,834p.

Travis Perkins, which trades from around 1,050 outlets in the UK, said that its lead indicators were showing early signs of a slowing in demand.

“We remain cautious about the economic climate in the second half of the year as a result of the uncertain interest rate outlook,” it said.

“As previously anticipated, our lead indicators are now showing the early signs of a slowing in demand."

For the six months to June 30, the group reported a pre-tax profit of £128.6 million, up from £110.4 million in the same period last year.

Total revenue increased 12 per cent to £1.6 billion, with like-for-like growth of 8.6 per cent.

The company’s builder's merchant business saw operating profit rise 14.1 per cent in the first half, while like-for-like sales rose 9.6 per cent.

The Wickes retail arm saw operating profit before property items rise 14.1 per cent.

Like-for-like sales grew 6.3 per cent at the division, down from the 8.7 per cent seen in the first four months.

Within the retail unit, the group’s showrooms saw the biggest decline, with like-for-like sales down 7.4 per cent, as higher borrowing costs hit sales of big-ticket items such as kitchen, bedroom, conservatory and bathroom goods, which are often bought on credit.

The group said: "Despite this slowdown, we are increasing our market share in this segment."

In a note, Merrill Lynch said the results were ahead of its expectations.

However, the broker added that it expects to make small downgrades to its above-consensus full-year earnings estimates.

Bridgewell Securities said the results were strong and ahead of its forecast. It retained its “buy” rating on the stock.

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