Covid costs TP £92m and 80% of operating profit

Revenue at builders and plumbers merchant Travis Perkins plc dropped 20% in the first half of the year, pulling operating profits down 81%, leaving it with an operating loss of £92m, the group announced this morning (September 8).

Travis Perkins plc

The merchanting division, which covers the brands Travis Perkins, Benchmarx, Keyline, CCF and BSS & TF Solutions, saw sales fall to £1,385m, 25.9% down on the same period in 2019, with adjusted operating profit £35m, down from the £140m for the first half of 2019, via a branch network that was 137 branches fewer at 848.

Toolstation’s revenue of £285m was 37.0% up on the first half of 2019, despite the disruption of lockdown thanks to a successful switch to digital trading with click & collect and direct delivery. This did, however, impact operating profit, which was £1m down from £13m, due to the higher cost of trading and the impact of losses in Toolstation Europe.

Travis Perkins plc City Plumbing

In the retail division – Wickes and Tile Giant – sales fell only 8.5% to £636m as the group saw strong recovery led by DIY sales and RMI and leveraged integrated digital capabilities during lockdown with stores acting as fulfilment centres. Gross margins were flat, mainly due to lower promotional activity and the closure of some kitchen and bathroom showrooms.

In the Plumbing and Heating division, the drop of 33.4% from £713m to £475m also included the impact of losing £100m year-on-year following the sales of the wholesale business PF&P.

In June, the group announced a programme of restructuring, branch closure and redundancies, to shut 165 branches and lose around 2,500 roles across the business.  These branches were mainly closed by the end of June with the remainder by the beginning of August. In the Travis Perkins general merchant, branch closures targeted smaller, subscale branches, in order to operate from fewer, larger branches with greater breadth and depth of product range. In the specialist merchants, with activity more towards delivery of products to customers, fewer customer visits to branches reduced the requirement for „nearby convenience‟, and branch networks have been rationalised to ensure an even spread of delivery capability across the UK, with right-sized branches in the right locations to service customers efficiently.

Travis Perkins plc CCF

The planned sales of the plumbing and heating division and the demerger of Wickes, both put on hold through market uncertainties, will be revisted when market conditions are more settled.

Nick Roberts, Chief Executive Officer, said: “Throughout the pandemic, the health and safety of our colleagues and customers has been our primary concern. Customer interactions have changed significantly resulting in changes to the way we do business, from increased activity through digital channels through to alterations to our physical store formats in order to maintain safe working practices.

“Although our financial performance in the first half of 2020 was impacted by the Covid-19 pandemic, and we have had to undertake a restructuring programme in light of the challenging outlook for the Group‟s end markets, we have made significant strategic and operational progress against the four strategic priorities we outlined at our full year results in March 2020. Although considerable uncertainty around the impact of the COVID-19 pandemic remains, the actions we have taken to adapt and innovate in our businesses mean that the Group is well 2 placed to continue to service our customers, support our colleagues, outperform our markets and generate value for our shareholders.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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