REG-Travis Perkins Travis Perkins: Travis Perkins plc - COVID-19 and Trading update

Travis PerkinsAnnouncement

28/04/2020 07:05

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   Travis Perkins (TPK)
   Travis Perkins: Travis Perkins plc - COVID-19 and Trading update

   28-Apr-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.

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   28 April 2020

    

   Travis Perkins plc - COVID-19 and Trading update

    

   Nick Roberts, Chief Executive, commented:

    

   "In light of the COVID-19 emergency,  we have established a new  operating
   model that  has  kept  colleagues and  customers  safe,  operating  within
   Government guidelines, and  enabling branches  across all  of the  Group's
   businesses to remain open. Moreover,  we have provided essential  services
   and support to  keep the nation's  critical infrastructure maintained  and
   operational and the  UK's homes  warm, dry and  safe during  this time  of
   need.

    

   "We continue to adapt our operations, applying stringent social distancing
   and  using  technology  to  enable  contactless  operations,  and  we  are
   therefore able to  respond to  the Government's  call to  ensure that  the
   construction industry can  continue to deliver  on crucial programmes  and
   projects and be an engine for future economic recovery.

    

   "As we move forward  we will continue to  adjust our operations, with  our
   foremost priority to keep colleagues  and customers safe and the  industry
   supplied with the materials it needs."

    

   AGM

   The AGM will take place at 9.30am  today at the offices of the Company  in
   Northampton. As stated in the AGM Notice on 3 April 2020, in light of  the
   impact of  the  COVID-19 pandemic  the  AGM will  be  held with  only  the
   Chairman of the Board and the Company Secretary & General Counsel present,
   who together  will  form  the  quorum  for  the  meeting,  with  no  other
   attendees. A live audio feed will be accessible to shareholders.

    

   Business operations and trading

   Since late March, the Group  has been running a "service-light"  operating
   model, focusing on serving customers through remote, non-contact channels.

    

   Throughout the early weeks  of the lockdown, around  a third of our  total
   Merchanting branches and around half of all Plumbing and Heating  branches
   were operating. These sites have  been primarily running call and  collect
   or direct delivery services to support essential construction  programmes.
   These include the construction of key NHS assets including the Nightingale
   hospital network, the ongoing  maintenance of national infrastructure  and
   support for the essential repair and maintenance of domestic homes.

    

   Wickes and Toolstation  have been  operating across the  vast majority  of
   their branch  networks, with  branches acting  as fulfilment  centres  for
   transactions completed via digital channels for either direct delivery, or
   with essential items  being available for  collection within a  designated
   time slot. The Wickes Kitchen & Bathroom design and installation  service,
   usually contributing around a third of Wickes sales, remains closed.

    

   In the first  three weeks  of April, operating  through the  service-light
   model, Group total revenue was approximately one-third of the same  period
   in 2019 on a comparable basis.

    

   In recent  weeks,  the Group  has  been working  closely  with  customers,
   suppliers, trade  bodies and  the UK  Government to  develop  safe-working
   protocols which can  be applied  across the construction  supply chain  to
   enable more activity to be carried out safely under lockdown.

    

   Since 20 April, the Group has been carefully opening more of its  Merchant
   branch network,  with branches  continuing to  operate the  service-light,
   non-contact operating  model.  This will  give  greater support  to  large
   construction firms and subcontractors as they restart construction  sites,
   and give  smaller,  local trade  customers  improved access  to  products.
   Revenue performance in  Wickes and  Toolstation has  continued to  improve
   with the  businesses responding  at pace  to the  changing nature  of  the
   trading  environment,   reconfiguring   to  significantly   increase   the
   capability of  distribution  networks to  cope  with the  high  levels  of
   consumer demand.

    

   Cost base mitigations

   Actions have been taken to reduce and carefully manage the operating  cost
   base of  the  Group,  with  all  businesses  taking  decisive  actions  to
   eliminate discretionary spend.  In addition,  the Group  has accessed  the
   Government support schemes which have been put in place.

    

   The closure of branches,  particularly across the Merchanting  businesses,
   has led to the furlough of both front line branch teams and colleagues  in
   support functions. Altogether around half of the Group's 30,000 colleagues
   were furloughed for the first three weeks of the lockdown. Colleagues have
   been  furloughed  on  full  pay,  with  leadership  teams  and   remaining
   colleagues working  hard  to  sustain  high  levels  of  communication  to
   maintain team cohesion and morale.

    

   In addition, a decision was taken and announced internally on 7 April 2020
   by the Board  of Directors and  the Group Leadership  Team to  voluntarily
   reduce their salaries by 20%  effective from 1 May  for a period of  three
   months.

    

   The Group is  benefitting from  the business  rates holiday,  a saving  of
   around £90m for the Group on an annualised basis.

    

   Cash management

   The Group continues to act to reduce cash commitments in order to conserve
   liquidity in the short-term, including benefiting from the deferral of VAT
   payments. Discussions have been held with landlords across the  businesses
   to move  the timing  of  rent payments  where possible,  including  moving
   rental payments from quarterly in advance to monthly in arrears.

    

   A rigorous  review  of capital  expenditure  has been  carried  out,  with
   discretionary capex not already committed being postponed until there is a
   greater  degree  of  certainty   around  any  future  economic   recovery.
   Maintenance capex,  which  is primarily  focused  on the  Group's  vehicle
   fleet, has been curtailed in line  with the drop in revenue and  delivered
   sales.

    

   Overall, the combination  of current  trading levels  and the  mitigations
   taken to control the overhead cost base means that for the first month  of
   lockdown the Group experienced  an overhead cash  outflow of around  £50m.
   With more  Merchanting branches  beginning to  open with  a  corresponding
   increase in sales volume and the  continued progression of trading in  the
   Wickes and Toolstation businesses, the Group expects this cash outflow  to
   reduce over the coming weeks.

    

   Robust financial position maintained

   The Group continues to maintain a strong liquidity headroom position  with
   a robust balance sheet.

    

   The Group has carried out detailed scenario analysis of liquidity headroom
   with the  key  focus  being  near-term  working  capital  management,  and
   specifically on  the  recovery  of trade  debtor  values  from  customers.
   Collections to date have been encouraging and are further supported by the
   progressive opening of  additional Merchanting branches.   With the  £400m
   revolving credit facility (RCF) fully drawn, as at 24 April 2020 the Group
   had £522m of cash on deposit. The Group maintains a good relationship with
   its core lending syndicate.

    

   Outlook

   The Group  has  adapted its  business  operations at  pace,  working  with
   industry and Government to design and  implement safe ways of working  and
   accelerating the use of technology for improved customer convenience,  and
   greater flexibility  and simplicity.  These  actions have  positioned  the
   Group well to support customers across the wider construction industry  as
   a critical economic engine for growth.

    

   Given the ongoing, considerable level of uncertainty, the Group is  unable
   to provide an accurate assessment on trading and withdrew market  guidance
   on 20 March 2020.  Whilst the uncertainty continues  with respect to  both
   the duration  of the  lockdown period  and the  eventual shape  of the  UK
   economic recovery,  the  Group remains  focused  on near-term  actions  to
   maintain  the  safety  and  welfare  of  its  colleagues,  customers   and
   suppliers,  and  to   promote  safe  practices   which  can  enable   more
   construction work to recommence.

    

   Q1 trading

   As reported  in our  statement on  20 March,  the Group  delivered a  good
   performance in the  first two and  a half months  of 2020, continuing  the
   positive momentum from 2019.  Performance was then significantly  impacted
   by the COVID-19 pandemic  and the lockdown measures  introduced in the  UK
   from 24 March.

    

   Q1 2020 sales     Merchanting(1) Toolstation(1) Retail(2)  P&H(1) Group(1)
   growth
   LFL Sales                 (8.7)%           9.1%      4.5%  (1.9)%   (3.8)%
   Net new space
                             (0.6)%          20.8%    (1.0)% (12.4)%   (2.0)%
   and acquisitions
   Trading days                1.4%           1.2%         -    1.6%     1.2%
   Total Sales               (7.9)%          31.1%      3.5% (12.7)%   (4.6)%
   growth

    

   Enquiries:

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

    

   Footnotes

   (1) Like-for-like sales growth for the three month period ended 31 March
   2020 compared to the three month period ended 31 March 2019. Total sales
   growth for the three month period ended 31 March 2020 compared to the
   three month period ended 31 March 2019.

    

   (2) Wickes like-for-like and total sales growth for the 13 week period
   ended 28 March 2020 compared to the 13 week period ended 30 March 2019.

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   ISIN:          GB0007739609
   Category Code: QRF
   TIDM:          TPK
   LEI Code:      2138001I27OUBAF22K83
   Sequence No.:  60696
   EQS News ID:   1030975


    
   End of Announcement EQS News Service

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References

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


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