Travis Perkins reports 3.8% rise in LFL sales for FY2015

Travis Perkins has reported a strong set of results for FY 2015 but said that difficult summer trading and impairments in its plumbing business dented results. 

The following text is from the trading update: 

Full year highlights

- Revenue increased by 6.5%, like-for-like revenue up 3.8% (11.4% two-year like-for-like)

- Adjusted operating profit, excluding property profits, increased by 8.7% to £389m

- Adjusted EPS increased by 4.3% to 124.1p, lower than the 7.6% growth in adjusted operating profit due to lower property profits and non-cash charges relating to foreign exchange contracts

- Full-year dividend increased 15.8% to 44.0p per share, reflecting confidence in future growth

- Network expansion continued, with net 53 new branches and stores opened, including implants

- Significant progress on major strategic fronts, including supply chain investments in General Merchanting and completion of the re-segmentation in Plumbing & Heating

- Free cash flow of £317m (note 13) at a cash conversion rate of 77% (2014: 66%) used to fund £134m of growth capex

- Lease adjusted return on capital employed (note 15b) increased to 10.5% reflecting higher earnings offset by the increase in capital employed including the £104m invested in freehold property

- Non-cash impairment charge of £141m recognised against goodwill and other intangible assets of PTS and F&P given the challenging market conditions 

John Carter – Chief Executive Officer said:

“The Group has delivered a good performance in 2015 despite the weaker than expected RMI market in the second half of the year. We made very good progress on our key strategic priorities; modernising General Merchanting, transforming Wickes and re-segmenting the Plumbing & Heating division, and we continued to improve our customer propositions, delivering access to greater ranges with better availability.

The increased capital and operational investments are enabling us to leverage the scale of the business and exploit structural advantages in sourcing and supply chain, driving our continued outperformance. We believe that the growth drivers in our markets remain strong and welcome the return to growth of mortgage approvals and secondary housing transactions in the second half of 2015. This has supported good growth in RMI sales for the Group in January and February 2016. This gives us further confidence that through our strategy we will successfully deliver against our medium-term targets of sales outperformance, low double-digit profit growth and improving returns.” 

General Merchanting

- General Merchanting revenue increased by 5.3%, 3.9% on a like-for-like basis, outperforming the market with strong growth in heavyside categories and tool hire.

- Adjusted operating margins, excluding property profits, improved by 20 bps. Despite a weaker and more competitive RMI market in the second half gross margins over the year improved by 10 bps. Higher operating costs from additional heavyside range centres were offset through significant efficiencies delivered in the second half of the year.

- Twelve new or relocated Travis Perkins branches were opened in 2015 in addition to 38 new Benchmarx branches.

Plumbing & Heating

- Plumbing & Heating revenue grew by 1.3%, a decline of 1.4% on a like-for-like basis.

- Adjusted operating margins, excluding property profits and a number of one-off short term contracts and associated sourcing benefits, reduced by 20 bps, primarily due to the sales disruption from the re-segmentation programme.

- The re-segmentation programme was accelerated through 2015, with the majority of branch conversions and closures completed six months ahead of plan.

- Lease adjusted return on capital employed reduced by 3 ppts, driven by the benefits of property profits and the Government backed ECO scheme in 2014 not repeating in 2015, and disruption from the re-segmentation programme.

Contracts

- Strong sales growth of 13.2%, 8.5% on a like-for-like basis was driven by Keyline and CCF, with both businesses continuing to take market share.

- Adjusted operating margins, excluding property profits, reduced by 10 bps. Gross margin reduction was driven by the shift in sales mix towards the lower margin CCF and Keyline businesses whilst operating efficiency improved with the increase in volumes.

- Lease adjusted return on capital increased by 1 ppt owing to the significant growth in profits more than offsetting additional capital employed.

Consumer

- Revenue growth of 8.0% and like-for-like growth of 5.3% demonstrates continued strong market share gains.

- Adjusted operating margin, excluding property profits and the year-on-year improvement arising from the reversal of impairments on loans to Toolstation Europe of £6m, improved by 30 bps.

- A further 40 Toolstation stores were opened in 2015 with additional openings committed in 2016.

See the full results presentation here.

Source : Travis Perkins PLC
www.travisperkinsplc.co.uk