Travis Perkins Updates Market on H1 Performance

Travis Perkins PLC announced their interim results for the 6 months ended 30 June 2020.

Financial highlights

• Fall in revenue of 20% demonstrated resilience despite the impact of the pandemic, with continuing recovery as lockdown measures eased.
• Adjusted operating profit of £42m reflecting shortfall from lower volumes partially offset by actions to reduce and control operating costs.
• Restructuring programme underway to reduce overheads in line with the anticipated volume outlook, delivering cost savings of £120m on an annualised basis.
• Net adjusting items of £129m, primarily relating to the restructuring programme.
• Strong focus on cash and working capital management driving reduction of covenant net debt of £322m from 31 December 2019 to £22m

Download the investor presentation here.

Strategic and operational progress

• Rapidly adapted the business model to ensure safety and deliver outstanding customer service throughout the pandemic.
• Accelerated elements of the strategic plan across digital enablement, customer fulfilment, process simplification and branch network.
• Significant improvements in digital platforms across all segments underpinning market outperformance and supporting future growth.
• Demerger of Wickes paused until markets become more stable and predictable

Nick Roberts, Chief Executive Officer, commented:
“Throughout the pandemic, the health and safety of our colleagues and customers has been our primary concern. Customer interactions have changed significantly resulting in changes to the way we do business, from increased activity through digital channels through to alterations to our physical store formats in order to maintain safe working practices.

Although our financial performance in the first half of 2020 was impacted by the Covid-19 pandemic, and we have had to undertake a restructuring programme in light of the challenging outlook for the Group's end markets, we have made significant strategic and operational progress against the four strategic priorities we outlined at our full year results in March 2020.

Although considerable uncertainty around the impact of the COVID-19 pandemic remains, the actions we have taken to adapt and innovate in our businesses mean that the Group is well placed to continue to service our customers, support our colleagues, outperform our markets and generate value for our shareholders.”

Commentary & Analysis - Steve Collinge

Back in June, the company announced the intention to close 165 TP branches (c.8% of network) and reduce overall headcount by around 2,500 (9% of workforce). Today the group has confirmed that the restructuring is expected to result in an annual saving of around £120m. The Board has re-confirmed its intention to sell the Plumbing & Heating Business and they still believe that the de-merger of Wickes will allow both businesses to fulfil their full potential. We should expect the sale/de-merger process for Wickes to recommence, once UK market conditions are more settled and stable.

Source: Insight DIY & Travis Perkins PLC

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