Builders Merchants Journal – BMJ Publishing to Builders Merchants and the UK merchanting industry for more than 95 years
We go to gain a little piece of ground,
That have no profit in’t but the name
I was at a few lunches in the run-up to Christmas (a hard old job, but someone’s got to do it) at which one of the topics under discussion was the “structural reorganisation” – AKA the raft of redundancies and lettings-go happening at the Travis Perkins Group.
Among the comments was that there would be some good people out there looking for new roles and that independents with spaces to fill should start keeping an eye out.
Well, now there’s one more person on the market.
For a great deal of the time that I’ve been writing about merchants and this industry, Travis Perkins was ahead of the game in terms of margins, gross and operating, and, of course, sales. In terms of sales, it still is. You don’t get to have that many branches and not be at the top of the BMJ league Tables in terms of actual moolah coming in.
However, two profit warnings since April last year and the realisation of the latest of those that adjusted operating profits were around £180m, itself down from the expected £240m suggested a year ago means that CEO Nick Roberts is shuffling off after five years on the Travis Perkins coil. The Board has, in the words of chair Jasmine Whitbread: “ fully recognised the under performance of the business over recent reporting periods, in the context of continued economic challenges and end market weakness.”
There is no doubt about one thing: it is grim out there, especially if you are hugely invested (in customer base terms) in the national housebuilding market as TP is. Even Toolstation, the golden goose leading the vanguard in the changing ways that customers interact with material suppliers, has had the shine taken off it by the underperformance of its French and Belgian wings. The curate’s egg of an annual report shows revenue, adjusted operating profits, pre-tax profits, EPS, return on capital…all down. To a certain extent, I suppose, we could just be seeing a readjustment of the markets post-pandemic-fuelled RMI boom, but 39% down is one hell of an adjustment profit-wise.
Roberts, who is staying on until he can hand the chalice onto his successor, says in the annual report: “We believe that our end markets will remain challenging throughout 2024. A UK general election is probable this year and geopolitical instability will continue to bring uncertainty to markets for a sustained period of time. Against this uncertainty we must focus on what we can control and ensure that we execute our decisions well and at pace.”
I don’t want it to seem as though I am picking on TP, by the way. It is pretty horrid out there for a lot of businesses, large and small. It’s just that when you are the biggest behemoth bestriding the market, your troubles, travails and tribulations are so much bigger, and get so much more airtime than others’. Your successes, and yes, your failures, are writ far larger than your competitors’ because you are so much more visible. That’s the way the economic cookie crumbles I’m afraid.
Yet, there are whispers, quiet whispers so as not to jinx anything, that there is still good business out there. Business so good that the A word is being mentioned – allocation.
2024 isn’t going to be an easy ride for anyone, but then when was it ever?
