Builders' merchant Travis Perkins reported strong group revenue growth of 4.8%, and 4.9% on a like-for-like basis, in its Q1 results, showing continued market outperformance in the Contracts division and Toolstation, with LFL sales up 19%.
Toolstation reported 25% total growth amid network expansion and as existing stores mature, while Wickes grew both core DIY and showroom categories, with a turnaround in kitchen and bathroom performance.
Adjusted operating profit declined by 1.3% while adjusted EPS grew by 3.7%
With Travis Perkins' 2018 half year results reporting a "challenging UK DIY market" negatively impacting sales and profitability in Wickes, the group said it would have significant cost reduction plans underway. With these plans in now progress, H2 adjusted operating profit, excluding property profits, grew by 10.7% underpinned by these activities.
Adjusting items includes a non-cash impairment of £246m against the goodwill in Wickes in H1 and restructuring costs across the Group. Travis Perkins announced in March this year that following a rigorous and wide-ranging selection process John Carter will step down as CEO and from the Travis Perkins Board on August 5 2019. He will be succeeded as CEO by Nick Roberts, currently CEO of Atkins (formerly the business of WS Atkins plc). Mr Roberts will join the business as a director of Travis Perkins and CEO designate on July 1 2019. To ensure a smooth handover, Mr Carter will remain with the Group until the end of 2019.
The group said good progress has been made on the strategic actions set out in December 2018, including simplification through the removal of the divisional structure above the Merchant businesses.
Travis Perkins says the 2019 adjusted operating profit is expected to be similar to 2018.
Chief executive officer, John Carter commented: “The Group delivered a solid performance overall in 2018 despite a challenging market backdrop. We took concerted self-help actions during the year, and the benefits of this cost reduction, together with improved trading, drove an improved profit performance in the second half of the year. In December 2018, we set out our intention to focus on delivering best-in-class service to trade customers and to simplify the Group. To that end, removing the divisional structure within Merchanting will enable an increased focus on customers at a business unit level, speed up decision making and, at the same time, reduce costs. In the longer term, the Group remains focused on generating sustainable profitable growth for shareholders and we will achieve this by allocating capital and resources to our most advantaged businesses. We are making good progress on the preparation for the disposal of the Plumbing & Heating division, and are seeing an encouraging improvement in trading and good momentum in Wickes.
Whilst we remain positive about the long-term outlook for our end markets, we are planning for uncertain market conditions to continue in the near term. The Group remains focused on self-help actions to underpin performance in the near term, whilst continuing to invest for the future.”