Travis Perkins (TPK) will demerge its home improvement retailer Wickes to shareholders as a standalone business in the first half of its 2020 financial year. The construction and home improvement specialist included demerger costs of £3.5m in a total of £127m in adjusted items, the bulk of which pertained to a £111m asset write-off relating to the roll-out of a troubled IT programme across the business, which is now being scaled back.
The disposal of Travis Perkins’ plumbing and heating products arm, meanwhile, is underway and classified as a 'discontinuing operation'. The divestment process is expected to complete by the end of 2019. With Travis Perkins currently undergoing substantial change, sight of its adjusted pre-tax profits allows for a more consistent understanding of the business’s performance against its prior year – and these rose by 5 per cent to £152m. Comparators are unlikely to tell the full story though. While Travis Perkins’ first half headline figures benefited from a softer comparable period in 2018, it now goes up against “strengthening comparators” in the second half with “subdued” underlying markets looming ominously.
Broker Peel Hunt forecasts full-year 2019 pre-tax profits and EPS of £344m and 109.8p, rising to £374m and 119.1p in 2020.
| TRAVIS PERKINS (TPK) | ||||
| ORD PRICE: | 1,372p | MARKET VALUE: | £ 3.46bn | |
| TOUCH: | 1,371-1,372p | 12-MONTH HIGH: | 1,489p | LOW: 966p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | NA | |
| NET ASSET VALUE: | 994p* | NET DEBT: | 16% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 2.59 | -116 | -57.2 | 15.5 |
| 2019 | 2.77 | 20.8 | 6.9 | 15.5 |
| % change | +7 | - | - | - |
| Ex-div: | 03 Oct | |||
| Payment: | 08 Nov | |||
| *Includes intangible assets of £1.54bn, or 611p a share | ||||
