1st Apr 2025 09:08
(Alliance News) - Travis Perkins PLC on Tuesday reported a loss in 2024 and warned profit in the year ahead would be lower than expected amid "challenging" trading conditions.
In response, shares in the Northampton-based building materials company fell 10% to 493.28 pence each in London on Tuesday morning.
Travis Perkins reported a pretax loss of GBP38.4 million for 2024 compared with a profit of GBP121.4 million for 2023.
Adjusted operating profit declined 23% to GBP152 million from GBP198 million. Significantly improved cost discipline was offset by lower trading volumes and price deflation.
Group revenue fell 4.7% to GBP4.61 billion from GBP4.84 billion a year prior driven by price deflation, continued decline in market volumes and underperformance in the Merchanting segment.
Chair Geoff Drabble said: "It is clear to the management team that there are a number of areas where the business needs to refocus and change the way it operates in order to better serve our customers and effectively support our suppliers."
Travis Perkins said its recent approach to capital allocation and overhead management has "diluted returns, exacerbated profit decline and resulted in leverage increasing beyond the group’s target range."
As a result, the company plans to create a business based around local branches, backed by support functions, believing it has become "too centralised" which has increased costs and complexity.
However, the near-term picture remains challenging and Travis Perkins said it has experienced a mixed start to 2025.
"Trading conditions have continued to be challenging in our Merchanting businesses with pricing now stabilised but volumes in modest decline. By contrast, Toolstation has started the year more positively and continues to deliver good growth," the firm said.
"It is encouraging to see a more robust demand backdrop for some elements of the construction market. However, the pace and rate of an overall recovery in construction activity levels remains uncertain and will likely need further cuts to interest rates and an uplift to consumer confidence levels to stimulate a meaningful increase in demand," Travis Perkins added.
As a result, Travis Perkins expects 2025 adjusted operating profit excluding property profit to be broadly in line with 2024.
In 2024, adjusted operating profit excluding property profit totalled GBP141 million, down 23% from GBP183 million a year prior.
Jefferies said this implies an around 25% cut to current consensus of GBP185.6 million.
A final dividend of 9.0 pence per share was declared, up from 5.5p a year ago, taking the full-year dividend to 14.5p, down 19% from 18.0p, in line with the group’s policy to pay a dividend of 30% to 40% of adjusted earnings.
By Jeremy Cutler, Alliance News reporter
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