Travis Perkins Group saw revenue grow by 3.5% in the first half of 2017, and by 2.7% on a like-for-like basis, according to the builders and plumbers merchant interim results released this morning (August 2).
Total Group revenue was £3.22bn, up from £3.11b for the same six month period a year previously, while operating profit at £186m, was down by 1.6% largely due to the challenging Plumbing & Heating market and recent investments, including in information systems.
John Carter – Chief Executive Officer said: “We executed our plan well and delivered a solid overall performance in the first half of 2017 against a challenging market backdrop of pronounced input cost inflation and market volatility. The robust growth and outperformance in our Contracts and Consumer divisions build on strong customer propositions and successful investments in those businesses.
“Today we have announced a comprehensive transformation plan in our Plumbing & Heating division which is designed to stabilise performance and to create more options to maximise shareholder value. Whilst we remain cautious on the macro-economic outlook for the second half, the Group remains focused on executing the clear plans it has in place which will deliver strong cash generation and maximise returns.”
Total revenue in the General Merchanting division was £1.05bn, up just 1%, on a branch network that was 18 ahead at 851.
Reported highlights from the division include:
- The roll-out of the new pricing framework including selective price investment, which has improved the value proposition for customers without negatively impacting margins.
- Utilisation of the range centres, with an additional 37 branches served by the delivery network in the first half of 2017, and a plan for a further.140 to be added in the second half
- The Travis Perkins transactional website now offers a two hour click & collect service,
- Eleven new Benchmarx branches were opened contributing additional revenue on top of a good like-for-like performance from the existing network.
Plumbing & Heating revenue reduced by 1.5% in the half to £669m and by 1.2% on a like-for-like basis. Growth in the first quarter was stronger than the second quarter, as expected, owing to trade customers buying in advance of manufacturer led cost price increases. Performance reflected the continued difficult market conditions in the large contract installer market, impacting PTS, where growth in the new build market was not enough to offset continued declines in social housing and reduced trade with one of our largest customers.
City Plumbing showed solid growth in the half, with improving like-for-like sales. The wholesale business also delivered positive sales growth with an improving trend through the second quarter.
Operating profit declined in the first half as a result of lower operating leverage resulting from the decrease in volume in addition to the very competitive market.
The Contracts division delivered strong sales growth at 8.3% to £675m and 9.1% on a like-for-like basis. All businesses demonstrated growth, especially CCF, the insulation and dry-lining specialist distributor. The division experienced significant input cost inflation in the half. Gross margin performance in the division was good as all three businesses focused on pricing activity to recover the input cost inflation. Adjusted operating margin expanded by 20bps with improvements from operating leverage partially offset by the shift in sales mix towards CCF and Keyline.
The Consumer division delivered a strong revenue performance with sales of £822m, up 7.3% with Wickes outperforming a tough DIY market, and continued strong growth in Toolstation through network expansion and accelerating like-for-like growth in existing stores. Adjusted operating margins fell by 20bps primarily due to the on-going investments in store refits and new store openings, together with the Group’s increasing investment to expand Toolstation in Europe.
Toolstation continued its expansion programme, with 19 new stores opened and improvements to the digital customer experience, including reducing click & collect times, extending online only ranges and improving product reviews, local search, and personalised offers, all of which drove a significant step up in sales growth.