Weak market conditions slash Travis Perkins profits

Builders merchant group Travis Perkins posted a slight drop in revenue and a slump in operating profits for the year ending December 31 2023, a financial period described as “a challenging year in weak market conditions”.

The unaudited full-year results, released this morning (March 5) show overall sales down 2.7% to £4.86bn, with operating profits tumbling 61% to £110m. Once adjustments have been made for exceptional items such as the £60m put aside to cover redundancies, the 39 stand-alone Benchmarx branch closures, and adjustments to do with Toolstation France, the adjusted operating profits are reported as  £180m, a 39% drop on the previous year.

The Merchanting segment had a challenging year with revenue down by (4.4)% and adjusted operating profit reduced by (32.5)% to £212m. The private domestic new-build market, primarily serviced by Keyline, CCF and Staircraft working with national and regional housebuilders, was significantly impacted by the economic turmoil in autumn 2022 with activity falling by around one-fifth in the year

Toolstation in the UK, on the other hand, made good progress during the year with 6.6% sales growth; the aim is to continue this revenue growth to £1bn by 2027.

Nick Roberts, Chief Executive Officer, said: “Ongoing economic challenges have significantly impacted our trading performance, driven by weakness in the new build housing and domestic RMI sectors, and compounded by deflationary pressures on commodity products. Faced with these challenges, we have invested to protect and build our leading market positions.

With market conditions expected to remain a headwind through 2024, the business is fully focused on improving profitability and enhancing cash generation. We have successfully acted to optimise our cost base and are actively addressing the impact of our loss-making businesses. We are also accelerating changes to our operating model, leveraging our scale to create a simpler, more efficient business. This will be achieved by simplifying our operational structures, consolidating our supply chain, creating shared procurement capability, and embedding new technology.

While the timing of recovery in our end markets is uncertain, the long-term growth drivers of our industry remain robust. The proactive steps we are taking to rebuild profitability and strengthen our balance sheet will create a more resilient business and, together with our strong customer relationships and differentiated offer, will see the Group well positioned to emerge stronger when markets recover.”