The sell-off of the Travis Perkins Plumbing and Heating division is likely to happen this year, and the Wickes DIY chain will spin-off to operate as a stand-alone business, the builders merchant group confirmed today (July 31).
Travis Perkins plc made the announcements as part of its interim results presentation, which showed like for like revenue up 8% to £2.7bn in the six months to June 30 2019. Operating profit was £64m in the six months to 30 June up from a loss of £104m in the first half of the previous year.
The P&H division is being treated as a discontinued operation. In the six months to June 30 its total revenue was £713m, down 7.9%. The restated group revenue without discontinuing operations was £2.59bn.
John Carter, Chief Executive Officer, who is stepping down from the role next month, said: “I am delighted with the progress the Group has made in executing the strategy set out at the capital markets event in December 2018; to focus on our advantaged trade businesses and to simplify the Group. The P&H sales process is well underway, and we are today announcing our intention to demerge Wickes as a separate business. This strategic progress has been underpinned by a strong trading period in the first half of 2019 albeit against softer trading conditions in H1 2018. Our trade merchanting businesses have outperformed their markets, through continued focus on delivering excellent customer service, and benefitting from the leaner, lower cost organisation now in place.
“Toolstation continues to deliver excellent growth through proposition improvements and network expansion. Wickes has delivered a strong turnaround in volume and profit performance, with gains in both core DIY and through the Kitchen & Bathroom showroom. 2 Whilst our underlying markets remain subdued, the self-help initiatives underway are supporting an encouraging improvement in performance and provide a strong platform to drive sustainable growth ahead of our markets in the medium term. Despite a cautious outlook for the near-term, the Group remains confident in making progress across the year as a whole.”
Total sales in the Merchanting segment grew by 4.8% to £1,869m, with growth of 6.4% on a like-for-like basis. Travis Perkins’ like-for-like sales grew by 5.2%, CCF achieved good sales growth, although this slowed towards the end of the half thanks to supply issues on plasterboard. BSS expanded its reach into the air conditioning market through the recently acquired TF Solutions business, with two further branches opened in the first half of 2019, taking the total network to five. Keyline is successfully focussing on heavy civils and drainage for large customers, which has driven further sales growth, primarily in directs. Whilst this product and customer mix is typically lower margin, it does mean the business can operate from fewer, larger, lower cost branches.
Toolstation grew sales by 23.1%, to £208m, primarily driven by the continued extension of the branch network – 21 in the first six months of 2019.
Wickes revenue has recovered strongly in the first half of 2019 after a difficult period in 2018, with like-for-like sales growth of 9.7%. Around 2% of the like-for-like growth is estimated to be attributable to the milder weather in March and April in 2019 compared with the same period in 2018. Core DIY sales performance benefited from a strong, clear and well balanced trading plan combined with the addition of new ranges, particularly in decorating and landscaping, and improvements made in the supply chain to increase product availability in store.