3rd Mar 2020 09:51
(Alliance News) - Builders' merchant and home improvement products retailer Travis Perkins PLC on Tuesday said it swung to a profit for 2019 due to cost reduction activities, growth in its Toolstation division, and a strong recovery by Wickes.
"Against a challenging market backdrop we have delivered a strong operational and financial performance across the group," said Chief Executive Officer Nick Roberts.
"Our merchanting businesses gained market share as a result of a range of initiatives to improve our customer proposition, including increased local empowerment for our branch managers, while the pace of the Toolstation expansion accelerated. The actions put in place to improve our Wickes and Plumbing & Heating businesses meant that both recovered well during the year and made positive contributions towards the group's overall performance."
For 2019, the Northampton, England-based company recorded pretax profit of GBP180.8 million versus a GBP49.4 million loss in 2018, on 3.2% revenue growth to GBP6.96 billion from GBP6.74 billion. Revenue grew 3.8% on a like-for-like basis.
Sales growth was driven by a good performance from the Merchant businesses, with continued growth in Toolstation and a strong recovery in DIY retailer Wickes, the FTSE 250-listed company said.
Annual adjusted operating profit grew 7.8% to GBP442 million, driven by improvements in all segments, with the biggest increase coming from Wickes.
The Wickes unit saw 7.4% year-on-year growth in annual revenue to GBP1.34 billion, primarily driven by self-help actions, Travis Perkins said. Adjusted operating profit for the division jumped 26% to GBP97 million, with adjusted operating profit margins improving by 100 basis points to 7.2%.
Travis Perkins said that the process to demerge its Wickes home improvement retailing business is proceeding smoothly and is due for completion in the second quarter of 2020.
The company also repeated its intention to divest Plumbing & Heating branch and digital businesses, with the sale having been paused in the final quarter of 2019. Travis Perkins sold the wholesale business within the Plumbing & Heating segment for GBP50 million cash in January.
Looking ahead, CEO Roberts said: "The long-term fundamental drivers of the group's end-markets remain strong, and our businesses enjoy leading positions in their respective markets. Whilst trading conditions in 2019 have been challenging we have seen some green shoots of recovery in our lead indicators, although it remains too early to point towards any tangible improvement in RMI."
Travis Perkins upped its 2019 dividend by 3.2% to 48.5 pence per share from 47.0p paid in 2018.
Shares in the company were up 2.9% at 1,486.00 pence each in London on Tuesday morning.
By Tapan Panchal; [email protected]
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