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Housekeeping pays off

Money speaks sense in a language all nations understand

Rather like giving the house a mega-tidy and clearing out all your rubbish from the attic before getting the estate agent round, Travis Perkins has spent the last couple of years streamlining and sprucing up its plumbing and heating division, finally putting the For Sale sign up at the end of November last year.

The housekeeping seems to have worked, since yesterday’s year-end result showed that the P&H division – once something of a problem child – had shown significant sales growth and increased market share. Lovely. Just what any potential purchaser wants to hear.

Wickes too, did rather better than in recent time, though there is still speculation as to whether it will stay within the group – “we may sell it, we may keep it, we may demerge it” CEO John Carter said in an analysts’ meeting yesterday.

More interestingly, the group also moved yesterday to streamline the group as a whole, bringing all the “merchnty-type” businesses (i.e. Benchmarx, BSS, CCF, Keyline and Travis Perkins) into one division, and removing layers of group management, in order to quicken the decision making process. This sees the removal of the existing divisional structure, with the result that the role of chief operating officer is no more and Tony Buffin has left the building.

How much difference and how quickly it will be felt at the sharp end remains to be seen, but the city analysts and fund managers seem to be impressed by the announcements, with the share price rising to a 12 month high. Pre-tax profit were £347m, a whole £13m higher than the analysts had predicted. Once you start on a regime of being mindful of costs, it’s as easy to stick with it as not, so the chances are that continued focus on costs and efficiency may help to boost profitability over the long run.

That said, bearing in mind the company is operating in a world where, on the one hand Construction Enquirer reports contractors claiming a Brexit-enforced skills crisis could cost them their businesses, and on the other, Persimmon the country’s second largest housebuilder posted profits of £1bn, it’s as well not to be complacent. Over to John Carter: “we are planning for uncertain market conditions to continue in the near term”.

The only thing we can be certain of, is that we can’t be certain of anything at the moment.

 

About Fiona Russell-Horne

Fiona Russell-Horne
Editor-in-Chief across the BMJ portfolio.

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