Travis Perkins: Weak Demand Leads To 4.4% Revenue Decline

• Good progress on business improvement actions amidst persistently challenging market conditions

Travis Perkins plc has published half year results for the six months ended 30 June 2024.

Maintaining market position in a challenging trading environment

• Continuation of trends from H2 2023 with weak demand across the Group’s end markets and commodity price deflation leading to revenue (4.4)% lower than prior year
  
  
• Lower volumes and the impact of price deflation on Merchanting gross margin resulted in adjusted operating profit of £75m (2023: £112m)
  
  
• Maintained market share and pricing discipline in Merchanting as focus remains on meeting customers’ needs in tough trading conditions
  
  
• Continued market share gains in Toolstation UK with operating margin up 130bps
  
  
• Adjusting items of £32m recognised in the first half (of which £10m is cash) resulted in statutory operating profit of £38m (2023: £107m)
  
  
• Full year adjusted operating profit expected to be around £150m inclusive of £(16)m of losses related to Toolstation France
  
  
• Interim dividend of 5.5 pence per share (2023: 12.5 pence per share)

Good progress on business improvement actions

• A simpler, more efficient business: restructuring actions and tighter controls have reduced overheads by £19m versus prior year with cost inflation absorbed. The Group is leveraging scale to deliver future savings in distribution and procurement.
  
  
• Addressing loss-making activities: on track to exit Toolstation France by the end of the year; strategic review of Toolstation Benelux complete with actions in place to deliver break-even performance in 2025
  
  
• Technology enablement: Oracle Finance ERP system went live 1 July 2024

• Enhanced cash generation: greater financial and operational discipline, including lower capital expenditure, resulted in a cash inflow in H1 of £82m and a reduction of £81m in net debt before leases. Working capital inflow of £54m driven largely by stock reduction; targeting further reduction in H2

New leadership to continue to drive the transformation of the Group’s operating model

• New CEO Pete Redfern and new Chair designate Geoff Drabble to join the Group in September and October respectively. Both will bring extensive construction sector experience and listed company expertise.

(1) Alternative performance measures are used to describe the Group’s performance. Details of calculations can be found in the notes listed. 

Nick Roberts, Chief Executive Officer, commented:

“Trading conditions have remained challenging through the first half of the year and we have continued to prioritise delivering for our customers whilst also recognising that a persistently lower volume environment means that we have to deliver a simpler, more efficient business. Whilst market conditions have impacted on our trading margin, we have made good progress on managing our overhead base and generating cash.

With a new government quickly setting out its plans to reform planning to deliver more housing and infrastructure, and the expectation of an easing in macroeconomic conditions, the Group is focused on ensuring that it is well placed to maximise the benefits from both a future recovery in demand and the long term requirement for the UK to expand and decarbonise its housing stock.”

Analyst Presentation

Management are hosting a results presentation at 8.30am. For details of the event please contact the Travis Perkins Investor Relations team as below. The presentation will also be available via a listen-only webcast – please register at the following link:

https://travis-perkins-2024-half-year-results.open-exchange.net/

Source : Travis Perkins plc

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