Builders and plumbers merchant group Travis Perkins posted a £123m pre-tax loss for the first half of 2018, thanks to its DIY-chain Wickes.
Across the group as a whole revenue grew by 4.4% to £3.36bn in the six months to June 30 2018, compared with the same period a year earlier.
In the general merchanting division, total revenue rose by 0.9% to £1,065m, with operating profits down by 11% at £86m. The plumbing and heating division grew like for like sales by nearly 20% to £774m, continuing to reap the rewards of its cost-cutting and transformation programme. The performance was ahead of expectations, with volume growth coming through all three parts of the business, the online channels, the branch network and the lower margin wholesale business, particularly in boilers.
The businesses in the Contracts division continue to perform strongly, growing ahead of their end markets and taking market share with revenue for the first half of £718m, up 6.4%. After a slow start to the year, mainly owing to delayed activity on large construction projects, like-for-like growth rates accelerated throughout the first half, reaching 9.5% for Q2. Five Keyline branches were closed, consolidated or switched to the Travis Perkins brand with over 90% of sales retained within the business.
The consumer division saw total revenue fall 1.8% to £807m. Toolstation performed well, with total sales growth of 17.6%, and 10.7% on a like-for-like basis. 22 new stores opened in the half taking the total network to 317. Wickes’ sales fell by 5.8% in the first half of the year, and by 7.7% on a like-for-like basis. Gross margin was down due to competitive pressures and operating profit declined by £14m. As a result, the Group posted an impairment of £246m in relation to goodwill.
John Carter – Chief Executive Officer said: “Our trade focused businesses in General Merchanting, Contracts, Toolstation and Plumbing & Heating achieved good sales growth despite experiencing a volatile first half. These businesses exited the period with encouraging momentum and, supported by a continued focus on cost, they remain on track to deliver modest profit growth for the full year. Our consumer-focused business, Wickes, has had a far more challenging period as weaker consumer spending trends, combined with a difficult competitive environment, have held back profitability. Consequently, the Wickes team is executing a significant cost reduction programme. Whilst these savings will help drive improved profitability through the second half of the year, Wickes’ profits will be lower than previously expected.