REG-Travis Perkins Travis Perkins plc Q3 2019 trading update: Resilient trading and continued progress in uncertain market conditions

Travis PerkinsAnnouncement

22/10/2019 07:05

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Travis Perkins (TPK)
Travis Perkins plc Q3 2019 trading update: Resilient trading and continued progress
in uncertain market conditions

22-Oct-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

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22 October 2019

                     Travis Perkins plc Q3 2019 trading update

      Resilient trading and continued progress in uncertain market conditions

Highlights

  • Merchanting businesses continued to outperform in challenging market conditions
  • Excellent growth in Toolstation UK; acquisition of controlling share of
    Toolstation Europe
  • Strong Wickes performance across both core DIY and K&B; demerger on track for
    Q2 2020
  • P&H divestment paused primarily due to market uncertainty

 

                                                                Group
Q3 2019 sales growth   Merchanting(1) Toolstation(1) Retail(2)        P&H(1)  Group
                                                                (exc.
                                                                 P&H)
Like-for-like sales              1.6%          15.4%      9.7%   4.3%      -   3.4%
growth
Net change in space            (0.6)%           5.9%    (1.4)% (0.2)% (2.6)% (0.8)%
Trading days                     1.6%              -         -   1.1%   1.6%   1.2%
Total sales growth               2.6%          21.3%      8.3%   5.2% (1.0)%   3.8%
Two-year LFL growth              5.9%          25.1%      1.8%   6.0%  14.8%   7.7%
                                                                                   

                                                                Group
YTD 2019 sales growth  Merchanting(1) Toolstation(1) Retail(2)        P&H(1)  Group
                                                                (exc.
                                                                 P&H)
Like-for-like sales              4.7%          16.6%      9.7%   6.7% (2.7)%   4.7%
growth
Net change in space            (0.7)%           5.7%    (1.1)% (0.3)% (3.1)% (1.1)%
Trading days                        -              -         -      -      -      -
Total sales growth               4.0%          22.3%      8.6%   6.4% (5.8)%   3.6%

 

Nick Roberts, Chief Executive, commented:

"Now in my  third month  since taking  over as CEO  of the  Group, I  have spent  a
considerable amount of time in our branches, learning about our businesses and  our
markets from colleagues,  customers and  suppliers. This has  confirmed my  initial
impressions that our  businesses are well  positioned to compete  strongly and  win
greater share in their markets  in the future. I  am particularly impressed by  the
quality of our teams and their  commitment to excellent customer service. The  plan
to simplify the Group's  portfolio of businesses remains  the right one, with  good
progress made through the quarter towards reducing cost and complexity and enabling
greater  focus  and   more  disciplined  capital   allocation  to  our   advantaged
trade-focused businesses.

The Group delivered a solid performance in Q3, despite trading conditions  becoming
incrementally more challenging through the course of the summer as a result of  the
on-going market uncertainty. Though the Group maintains a cautious outlook for  the
near-term, full year performance remains in line with our expectations."

Business performance

Total Group sales grew by 3.8% in Q3,  and by 3.4% on a like-for-like basis.  There
was one additional trading day in the quarter, bringing the number of trading  days
year-to-date in  line  with  2018.  Across  the  Group,  year-to-date  sales  price
inflation has  been  lower  than  in previous  years,  at  around  1.5%,  primarily
concentrated in the merchanting businesses.

 

Despite the wider building materials distribution market softening since  mid-year,
the Group's Merchanting businesses delivered  like-for-like growth of 1.6%.  Travis
Perkins, the general mixed merchant, showed encouraging like-for-like growth of  2%
demonstrating continued market share  gains, particularly in heavyside  categories.
The larger commercial construction market has been more challenging in the quarter,
with the specialist merchants delivering  modest growth, primarily driven by  price
inflation. Pressure on sales  volume has been exacerbated  by the continued  supply
restrictions on plasterboard materials in  CCF, although the situation is  steadily
improving. The  P&H business  continues to  perform well,  with good  like-for-like
growth in  higher-margin branch  network  sales offset  by  lower revenues  in  the
wholesale business.

Toolstation  continued  its  impressive  like-for-like  and  total  sales   growth,
underpinned by  the  continued expansion  of  the UK  branch  network to  over  370
branches, and  a successful  further extension  of trade-focused  ranges which  are
helping to increase  sales density. Further  enhancements in customer  proposition,
such as  a  5-minute  click  &  collect  service,  are  improving  convenience  for
customers.

The Retail segment achieved  like-for-like sales growth of  9.7%, with total  sales
growth of 8.3%.  The strong  performance of Wickes  continued in  Q3, with  further
market share gains in the Home  Improvement market through core DIY categories  and
in the Kitchen & Bathroom showroom (K&B). Core DIY sales continue to benefit from a
strong trading  plan  with  targeted  promotional  activity,  the  success  of  the
"online-in-store" ordering  service,  which  is improving  customer  access  to  an
extended range of products, and the continued attraction of the TradePro scheme  to
small trade customers.  K&B sales  remain robust, with  increasing lead  generation
through digital  channels,  good  sales conversion  and  increasing  proportion  of
installation services.

Strategic progress

The process to demerge Wickes  from the Travis Perkins Group  is on track, both  in
terms of the separation of the business from the Group to increase its autonomy and
the regulatory process required. The Group aims for the demerger to be completed in
Q2 2020. Given the current unprecedented  level of uncertainty, we have decided  to
pause the sale process of  the Plumbing & Heating business  for the time being.  In
the quarter,  the Group  acquired a  controlling share  of the  Toolstation  Europe
business which  will enable  the  Group to  accelerate  investments to  expand  the
Toolstation network in Europe in the coming years.

The Group remains on target  to achieve its planned  cost reductions in 2019,  with
actions identified  or already  underway  to achieve  £20m  to £30m  of  annualised
savings by mid-2020 which will reduce complexity, lower the above-branch cost  base
and speed up decision making, and improve service levels for customers.

Investor / analyst enquiries:                                            Media
                                                                         enquiries:
Graeme Barnes                        Zak Newmark                         David
                                                                         Allchurch
+44 (0) 7469 401819                  +44 (0) 7384 432560                 Harry
                                                                         Cameron
                                                                         +44 (0)
 1 graeme.barnes@travisperkins.co.uk  2 zak.newmark@travisperkins.co.uk  207 353
                                                                         4200

Footnotes

(1)  Like-for-like and total sales growth for the three month period ended 30
September 2019 compared to the three month period ended 30 September 2018.

(2) Wickes like-for-like and  total sales growth  for the 13  week period ended  28
September 2019 compared to  the 13 week period  ended 29 September 2018.Tile  Giant
like-for-like and total sales growth for the three month period ended 30  September
2019 compared to the three month period ended 30 September 2018.

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   ISIN:           GB0007739609
   Category Code:  QRT
   TIDM:           TPK
   LEI Code:       2138001I27OUBAF22K83
   OAM Categories: 3.1. Additional regulated information required to be
                   disclosed under the laws of a Member State
   Sequence No.:   24125
   EQS News ID:    893631


    
   End of Announcement EQS News Service

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References

   Visible links
   1. mailto:graeme.barnes@travisperkins.co.uk
   2. mailto:zak.newmark@travisperkins.co.uk


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