REG-Travis Perkins Travis Perkins plc - first quarter trading update for the three months to 31 March 2023

Travis PerkinsAnnouncement

25/04/2023 07:15

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   Travis Perkins (TPK)
   Travis Perkins plc - first quarter trading update for the three months to
   31 March 2023

   25-Apr-2023 / 07:00 GMT/BST

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                                 25 April 2023

    

   Travis Perkins plc - first quarter trading update for the three months to
                                 31 March 2023

    

      Resilient Q1 performance in challenging market conditions; full year
                             expectations unchanged

    

   Travis Perkins  plc,  a  leading partner  to  the  construction  industry,
   delivered a resilient first quarter  trading performance with total  sales
   down by (2.8)%1 amid challenging market conditions.

    

   As expected, trading volumes in the Merchanting business were impacted  by
   weakness in the  new build  housing and domestic  repair, maintenance  and
   improvement (RMI) markets.  The commercial, industrial  and public  sector
   markets, which  represent  just  under  half of  the  Group’s  end  market
   exposure, saw more resilient demand.

    

   Merchanting sales price inflation moderated  from the second half of  2022
   but remained  elevated  at 9.0%.  This  was predominantly  driven  by  the
   rollover of  price  increases  from  prior year  but  also  reflective  of
   pass-through of further manufacturer increases  on some key product  lines
   in 2023. Overall,  Merchanting total  sales were  down by  (4.7)%1 in  the
   quarter.

    

   Longer term  social  and  economic  infrastructure  projects  continue  as
   planned across  areas such  as  social housing,  road, rail,  schools  and
   hospitals with investment in these strategically important markets largely
   underpinned by legislation  and regulation,  which continue  to evolve  at
   pace. As  an example,  the recent  announcement of  nearly £2  billion  in
   funding for The Social Housing Decarbonisation Fund presents an  excellent
   opportunity for the Group’s Managed Services business.

    

   The Group continues to make  good strategic progress with the  development
   of value-added  services as  customers increasingly  look for  support  to
   navigate a more complex operational and regulatory environment. In  March,
   the Group launched its WholeHouse initiative, an innovative approach which
   offers a turn-key solution to SME  and regional housebuilders to plan  and
   design bespoke digital models of  individual housing units with the  Group
   supplying all  materials  required  for the  build.  Whilst  this  remains
   early-stage, there has been a positive response from customers, and is  an
   example  of  how  Travis  Perkins  Group  can  leverage  its  scale,  deep
   understanding of the market  and best-in-class sustainability insights  to
   deliver benefits for customers.

    

    

    

    

   Toolstation delivered a good performance  in the first quarter with  total
   sales growth of 8.6%  and like-for-like sales growth  of 4.6%. In the  UK,
   the appeal  of the  omni-channel  model to  customers continues  to  drive
   digital adoption with App downloads now  passing one million and almost  a
   third of  customers  now  preferring  to use  the  App  to  purchase  from
   Toolstation.  The  business  has   commenced  commissioning  of  the   new
   partly-automated UK distribution centre in Pineham, Northamptonshire which
   remains on track to be fully operational by the third quarter of the year.
   In Europe, total sales  were up 14%2 during  the period with equally  good
   adoption of the App, notably amongst the trade customer base.

    

   Nick Roberts, Chief Executive, commented:

   “As we had anticipated, trading  conditions were challenging in the  first
   quarter but  our  diverse  exposure across  the  construction  sector  has
   enabled us to deliver a resilient performance. The timely actions taken to
   prepare our  businesses  for  a  lower demand  environment  mean  that  we
   continue to expect to deliver a full year performance in line with  market
   expectations 3.

    

   We are focused  on ensuring  the right  balance between  cost and  capital
   discipline and investing to deliver against our strategic priorities.  The
   growth opportunities provided by  the need to  decarbonise the UK’s  built
   environment, improve the energy efficiency of public and private buildings
   and increase  the UK’s  housing stock  remain significant.  Allied to  our
   strategy of expanding value-added services in the Merchant businesses  and
   maximising the growth potential  of Toolstation, these structural  drivers
   leave the Group well placed for future outperformance.”

    

   Notes

    

   1 Trading day adjusted

   2 On a constant currency basis

   3  ”Market  expectations”  are  derived  from  company  compiled   analyst
   consensus. This stood at £272m Group adjusted operating profit for FY23 at
   time of publication and can be reviewed via:

    

    1 https://www.travisperkinsplc.co.uk/investors/analyst-consensus

    

    

    

    

    

    

    

    

    

   Q1 2023                      Merchanting Toolstation  Group
   Volume                         (12.2)%      1.0%     (10.2)%
   Price and mix                   9.0%        7.6%      8.7%
   Total revenue growth           (3.2)%       8.6%     (1.5)%
   Network changes                 0.5%       (4.0)%    (0.1)%
   Trading days                   (1.5)%       0.0%     (1.3)%
   Like-for-like revenue growth   (4.2)%       4.6%     (2.9)%

    

   Travis Perkins Management  team will be  hosting a call  for analysts  and
   investors at 8.30am BST. Details of  the call are below with  participants
   requested to join 10 minutes before the scheduled start time;

    

   United Kingdom: 0808 109 0700

   Overseas: +44 (0) 33 0551 0200

   Please quote “Travis Perkins Q1” when prompted by the operator

    

   Enquiries:

   Travis Perkins                     FGS Global
   Matt Worster                       Faeth Birch / Jenny Davey / James Gray
   +44 (0) 7990 088548                +44 (0) 207 251 3801
   matt.worster@travisperkins.co.uk   TravisPerkins@fgsglobal.com

    

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   ISIN:           GB00BK9RKT01
   Category Code:  QRF
   TIDM:           TPK
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