REG-Travis Perkins Travis Perkins: Q3 2020 trading update - continued recovery

Travis PerkinsAnnouncement

22/10/2020 07:05

============

   Travis Perkins (TPK)
   Travis Perkins: Q3 2020 trading update - continued recovery

   22-Oct-2020 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

   ═══════════════════════════════════════════════════════════════════════════

   22 October 2020

    

   Travis Perkins plc - Q3 2020 trading update - continued recovery

    

   Highlights
    

     • Group like-for-like revenue growth of 3.9% in Q3
     • Strong demand through domestic RMI sales continued, driving the  strong
       performance in Wickes, Toolstation and local trade market
     • Lag  in   recovery  of   larger   customer  activity,   including   new
       housebuilding and larger construction projects
     • Group liquidity  remains  strong, £980m  of  liquidity headroom  at  30
       September 2020

    

   Q3 2020 sales growth       Merchanting1 Toolstation1 Retail2    P&H1  Group
   Like-for-like sales growth       (3.1)%        25.5%   18.3%   0.40%   3.9%
   Net space change                 (7.4)%         8.9%  (1.0)%  (4.2)% (4.9)%
   Acquisitions / disposals              -        15.5%       - (16.6)% (2.4)%
   Trading days                          -            -       -       -      -
   Total sales growth              (10.5)%        49.9%   17.3% (20.4)% (3.4)%
   Two-year like-for-like           (1.5)%        44.8%   29.8%    0.4%   7.4%

    

   YTD 2020 sales growth     Merchanting1 Toolstation1 Retail2    P&H1   Group
   Like-for-like sales            (18.4)%        17.3%    0.2% (15.6)% (11.8)%
   growth
   Net network changes             (2.6)%         8.8%  (0.8)%  (1.0)%  (1.4)%
   Acquisitions / disposals             -        15.1%       - (12.8)%  (1.8)%
   Trading days                      0.4%         0.4%       -    0.4%    0.4%
   Total sales growth             (20.6)%        41.6%  (0.6)% (29.0)% (14.6)%

    

   Nick Roberts, Chief Executive, commented:

   "We have reported a positive overall like-for-like sales performance in the
   quarter as our markets  have continued to recover  following the impact  of
   the national lockdown earlier this year.  This has been driven by a  strong
   recovery in  demand across  domestic RMI  markets, benefitting  the  Travis
   Perkins, City Plumbing, Wickes and  Toolstation businesses who serve  these
   markets. Currently this domestic RMI trend remains strong.

   Whilst local  trade  activity  has recovered  well,  our  trade  businesses
   continue to  experience a  lag in  recovery from  larger housebuilding  and
   construction projects.  However, there  are  signs of  increasing  workflow
   across these sectors  as underlying demand  strengthens as businesses  have
   adapted to new and safe ways of working that enable them to keep sites open
   during periods of local lockdown.

   During the quarter, we have made further progress in strengthening the core
   of our trade  businesses, in addition  to completing the  disposal of  Tile
   Giant.

   Our excellent  cash  generation this  year  has built  a  strong  liquidity
   position, and combined with the decisive  actions taken in June to  realign
   our cost base to the new trading  environment we are confident in both  the
   Group's ability  to navigate  the  near-term uncertainty,  as well  as  our
   position for the long term as we build towards becoming the leading partner
   for the construction industry."

    

   Business performance

   Like-for-like sales grew by 3.9% in Q3, although total Group sales declined
   by 3.4%, reflecting branch closures since June. There was no net impact  of
   trading days in the quarter, compared with the same period in 2019.  Across
   the Group there was  no appreciable impact from  price inflation, with  the
   change in sales driven by volume.

   There have been significant differences  in performance across the  Group's
   end markets,  with  particular strength  in  domestic RMI,  manifesting  as
   strong sales in DIY categories in Wickes and Toolstation, and good  trading
   levels with local trade customers  in Toolstation, Travis Perkins and  P&H.
   By contrast, the larger end of customer activity has been slower to  return
   to normal,  and  at  the  end  of  September  both  new  housebuilding  and
   commercial construction  continue to  run at  levels some  way below  2019,
   specifically impacting the  specialist merchants  and elements  of the  P&H
   business.

   The progression of sales recovery has continued throughout Q3, particularly
   in the trade focused businesses. During July, volumes picked up strongly as
   markets exited the lockdown period. Trading in August was modestly  softer,
   impacted by a protracted  holiday season, before then  picking up again  in
   September in line  with schools reopening  and many trades  returning to  a
   more normal work schedule.

   Continued buoyancy in the DIY markets and a more encouraging trend in trade
   focused markets in September has driven like-for-like growth of 8% for  the
   month, with total sales growth, adjusted for trading days, of around  0.3%.
   The difference between LFL sales and total sales performance was  primarily
   due to  the impact  of the  merchanting  branch closures  in June  and  the
   disposal of  PF&P,  partially reduced  by  the acquisition  of  Toolstation
   Europe.

   Across the Merchant and P&H segments, whilst the branch closures  announced
   in mid-June  were significant  drivers  of the  reduction in  total  sales,
   businesses have successfully migrated a significant proportion of sales  to
   nearby branches,  in  line  with management  expectations.  This  has  been
   particularly true  for larger  customers who  already trade  with  multiple
   branches  and  customers  of  the  specialist  merchants  where  a   higher
   proportion of sales  are delivered.  At a  Group level,  this retention  of
   sales added around 3% to like-for-like performance.

    

   Liquidity position

   The Group continues to maintain a strong liquidity position, with £580m  of
   cash on  deposit at  30  September combined  with  the undrawn  RCF  giving
   overall headroom of £980m.

    

   Portfolio development

   The Group completed the  sale of the Tile  Giant business on 30  September.
   This demonstrates a further step  towards the simplification of the  Group,
   and to focus on our  advantaged trade businesses.

    

   Outlook

   During Q3 the Group's end markets  have shown an encouraging recovery  from
   the lockdown period, however significant uncertainty remains from both  the
   pandemic and the ongoing  Brexit negotiations, making  it hard to  forecast
   performance in the near-term. Based  on the assumption that current  volume
   trends continue, including the ongoing strength in DIY sales, and that  any
   further lockdown measures introduced  do not have  a significant impact  on
   the Group's end markets, the Group  expects its EBITA performance for  2020
   to be in the upper half of the current range of analysts' expectations3.
    

   Enquiries:

   Travis Perkins                          Powerscourt
   Graeme Barnes                           Justin Griffiths / James White
   +44 (0) 7469 401819                     +44 (0) 207 2501446
   graeme.barnes@travisperkins.co.uk       travisperkins@powerscourt-group.com
                                            
   Heinrich Richter                         
   +44 (0) 7392 125417                      
   heinrich.richter2@travisperkins.co.uk    

    

   Footnotes

    1. Like-for-like sales growth for the three month period ended 30
       September 2020 compared to the three month period ended 30 September
       2019. Total sales growth for the three month period ended 30 September
       2020 compared to the three month period ended 30 September 2019.
    2. Wickes like-for-like and total sales growth for the 13 week period
       ended 26 September 2020 compared to the 13 week period ended 28
       September 2019.
    3. Company compiled market consensus for FY 2020 Group EBITA as at 15
       October 2020, calculated from 14 analysts, of £239m (range of £222m to
       £261m).

    

    

   ═══════════════════════════════════════════════════════════════════════════

   ISIN:          GB0007739609
   Category Code: TST
   TIDM:          TPK
   LEI Code:      2138001I27OUBAF22K83
   Sequence No.:  86339
   EQS News ID:   1142325


    
   End of Announcement EQS News Service

   ══════════════════════════════════════════════════════════════════════════

    1 fncls.ssp?fn=show_t_gif&application_id=1142325&application_name=news&site_id=reuters8

References

   Visible links


============