19th Oct 2016 06:13
LONDON (Alliance News) - Travis Perkins PLC on Wednesday tabled plans to close more than 30 branches and improve efficiency in its supply chain, citing uncertainty over UK customer demand going into 2017.
The FTSE 100-listed builders' merchant said that, for the three months ended September, its sales grew 3.4% year-on-year, and 2.0% on a like-for-like basis, after strong performances in both its General Merchanting division and Consumer division.
Travis Perkins reported 3.8% annual sales growth in General Merchanting, or 0.6% on a like-for-like basis, while Consumer sales grew 9.1% or 6.3% on a like-for-like basis. Meanwhile sales in its Contracts division also grew by 4.0%, or 5.7% on a like-for-like basis.
However, the company said sales within its Plumbing & Heating division declined 3.9% in the third quarter or 4.1% on a like-for-like basis.
Travis Perkins noted the combination of weak demand, changing customer buying behaviour, and the impact of previous government boiler replacement incentive schemes had meant the plumbing, heating and bathroom markets had "been challenging". The operations of the Plumbing & Heating division will be fully reviewed and the outcome of the review and any associated costs will be communicated in 2017, Travis Perkins said.
Given that "levels of future demand remain difficult to predict", Travis Perkins said it has chosen to implement "a number of efficiency programmes and branch closures", resulting in exceptional charges of between GBP40.0 million and GBP50.0 million in 2016. Around two thirds of these exceptional charges will be non-cash write-offs.
The branch closures are expected to affect around 600 employees, who Travis Perkins said are aware of the changes.
"Our Plumbing & Heating results were disappointing and whilst market conditions have worsened, we are not satisfied with our performance and will commence reviewing these operations. Our operational focus remains on improving all of our customer propositions, optimising our networks, intensifying our use of space and exploiting the scale advantage we have created," said Chief Executive John Carter.
By Hannah Boland; [email protected]; @Hannaheboland
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