Travis Perkins’ (TPK) plumbing and heating business remained a drag for the builders’ merchant in the first half to June 2017. Revenue at the troubled division slipped by 1.5 per cent to £669m, while adjusted operating profit fell by 31.5 per cent to £13m as margins tightened.
A restructuring programme is under way and will cost up to £40m over the next year. The division has struggled as traditional plumbing merchants have come under competitive pressure from online and fixed-price multi-channel operators. Plans include the introduction of online brands, a more integrated branch network, and a better range of products and availability.
The core general merchanting division, which accounts for a third of group revenue, pushed sales marginally ahead to £1.06bn, although that reflected 11 new Benchmarx branches opening, with like-for-like revenue marginally lower. Adjusted operating profit slipped 3 per cent as trading volumes were affected by the implementation of price rises triggered by significant cost price inflation. The Wickes and Toolstation retail business pushed combined sales ahead by 7.3 per cent despite a tough DIY market, and adjusted operating profit grew by 2.3 per cent to £45m. Toolstation improved its click-and-collect option and extended online-only product ranges.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to December 2017 of £383m and EPS of 125p (from £381m and 122p in 2016).
| TRAVIS PERKINS (TPK) | ||||
| ORD PRICE: | 1,492p | MARKET VALUE: | £3.75bn | |
| TOUCH: | 1,491-1,493p | 12-MONTH HIGH: | 1,714p | LOW: 1,301p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 497 | |
| NET ASSET VALUE: | 1,104p* | NET DEBT: | 14% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 3.11 | 176 | 55.7 | 15.25 |
| 2017 | 3.22 | 168 | 53.6 | 15.5 |
| % change | +3 | -5 | -4 | +2 |
| Ex-div: | 28 Sep | |||
| Payment: | 10 Nov | |||
| *Includes intangible assets of £1.9bn, or 758p a share | ||||
