Travis Perkins returns to profit despite ‘challenging market’
Building materials business Travis Perkins said today it had swung to a profit in 2019.
It said operating profit was £232m, compared to a £22m loss last year.
Adjusted operating profit rose 7.8 per cent to £442m, despite a “challenging market backdrop”.
Revenue grew 3.2 per cent to £6.9bn, with like-for-like revenue growth of 3.8 per cent.
Basic earnings per share was 48.9p, up from a loss of 34.4p last year.
It said its profit was driven by a strong recovery in its Wickes business, its transformation programme in its plumbing and heating business and the impact of cost cutting.
The company said it had delayed the divestment of its plumbing and heating business in late 2019 due to “unprecedented uncertainty”.
The company said its process to demerge DIY division Wickes was “well progressed” with completion expected in the second quarter.
It sold its wholesale plumbing and heating unit Primaflow to distribution group Newbury Investments for £46m in January.
Chief executive Nick Roberts said: “The group remains focused on delivering against our key priorities, and we are optimistic that we can build on the positive performance in 2019, continue to outperform our end-markets and deliver improved returns for our shareholders.”
Shore Capital analysts said: “We believe there is better value and clearer strategies available elsewhere in the building materials sector.”
Canaccord Genuity analysts said: “There is plenty of change being undertaken by the group currently. The 2019 results all look broadly as expected, with no big surprises and profits slightly ahead of expectations.”
And added: “Attempting to strip out all the change, one would reasonably expect flat profits for 2020 at this early stage. Overall, the Group continues to move towards being a more Trade focused business with an emphasis on operational performance, growth and cash generation. Valuation now looks less stretched.”
Analysts at UBS said: “Twenty nineteen trading was resilient but 2020 outlook looks somewhat softer with trading still challenging near-term.”
Shares rose 2.3 per cent to 1,492p in early trading.