Travis Perkins shares rallied on beaten analyst expectations even as the company posted a loss for the first time in years for 2018 against a “challenging” market backdrop.
The builders’ merchant grew revenues 4.8 per cent to £6.7bn last year, with like-for-like revenue growth up 4.9 per cent – faster than 2017.
Its pre-tax profits plummeted from £290m to a loss of £49m, the company said, but it rose 1.2 per cent to £347m when factoring out costs for a review of its plumbing and heating division, IT investments and costs from redundancies and reorganisations, among others.
Meanwhile, net debt rose £12m to £354m.
Why it’s interesting
Although on the face of it Travis Perkins drop into loss looks concerning, the company’s adjusted profit before tax came in nearly £13m above analyst estimates of £334.4, according to data from Refinitiv Ibes.
This was enough to buoy investors, with shares up 10.5 per cent, making the Wilkes owner the fastest riser in London this morning.
The company also said this morning that its chief operating officer Tony Buffin was stepping down – “a negative development” according to Graeme Kyle at Shore Capital Markets.
“Travis published 2018 financial year prelims this morning which demonstrated a degree of revenue and profit recovery in the second half of the year,” Kyle said.
The company, which is stockpiling for Brexit, said it expects 2019 adjusted operating profit to be similar to last year.
What Travis Perkins said
“The group delivered a solid performance overall in 2018 despite a challenging market backdrop,” said chief executive John Carter.
“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.”