Travis Perkins has warned that last month's cut in interest rates failed to boost consumer spirits.
The builders merchant said its core business, geared towards tradesmen, had been affected by a slowdown in the housing market, while its Wickes business, which is aimed at the DIY enthusiast, has been particularly hit by a slump in consumer confidence and a slowdown in the housing market.
Sales at Wickes, which accounts for a third of turnover, fell 7.4 per cent in July and August, the company reported, compared to a 4.9 per cent decline in the six months to the end of June.
The group which acquired the Wickes chain for £950 million in February, said it did not expect its markets to strengthen until 2006.
However, it said it was still making good progress in integrating Wickes into the group. The firm contributed to a 41.3 per cent rise in turnover to £1.29 billion in the six months to June 30.
Pretax profits improved by £10 million to £110 million. However, chief executive Geoff Cooper pointed out that the results were presented for the first time under International Financial Reporting Standards (IFRS), which reduced pretax profit by £5.1 million.
Travis said it had added 37 Travis Perkins stores in the first six months and Mr Cooper said he expected to open a similar level of outlets in the second half.
The combined business, which employs about 16,000 staff, said it had cut staff numbers on the year earlier by 450, or 4.7 per cent, in the merchant business and by 284 in Wickes retail.
It said the cost-cutting had enabled the company to mitigate the impact of lower than expected volumes and an increase in product cost inflation.
Northampton-based Travis, which trades from 972 locations in the UK, said it would continue to focus on tight cost controls, but indicated much of its own progress depended on factors outside its control.
It said: "The recent cut in interest rates, although helpful, has not resulted in a significant change in sentiment.
"Further reductions in borrowing costs and in other pressures on disposable incomes are likely to be necessary before the group can expect stronger markets in 2006."
Turnover in the 26 weeks to June 26 fell by 4.9 per cent on a like-for-like basis while turnover per working day was down by 0.5 per cent at Travis Perkins, including a 1.6 per cent rise in the core builders' merchant business and a fall of 4.1 per cent in specialist merchandise.
Analysts said Wickes' figures were weaker than expected but its builders' merchants arm continued to show an improvement.
Mr Cooper said he was felt " reasonably comfortable" about analysts' forecasts that pitched full year pretax profit at about £230 million.
The company declared a 16 per cent increase in the interim dividend to 11 pence per share.