Travis Perkins plc (LON:TPK), a leading partner to the construction industry, has announced its half year results for the six months ended 30 June 2023.
Financial Highlights
- Revenue of £2,472m down (2.5)% and adjusted operating profit of £112m down (31)% reflecting weak market volumes in private domestic RMI and new build housing
- Adjusted earnings per share of 30.5p down (41)% resulting from lower trading profit, phasing of property profits and the increase in the UK corporation tax rate
- Strong cash conversion at 105% driven by tight working capital management
- Lease-adjusted leverage (net debt / EBITDA) of 2.1x due to lower earnings and increased lease commitments. Net debt before leases reduced by £32m during the half.
- Interim dividend maintained at 12.5 pence per share reflecting the Group’s robust balance sheet and confidence in the medium term outlook
- As previously guided, full year adjusted operating profit expected to be around £240m
Operational Highlights
- Merchanting saw resilient demand across commercial, industrial, infrastructure and public sector markets. However, performance was impacted by significant weakness in new build housing and private domestic RMI markets with revenue down (4.5)% overall and operating profit (23.5)% lower due to high operational gearing.
- Toolstation delivered market share gains, with revenue up 9.0%, driven by network maturity benefits and focus on enhancing the trade customer proposition. Operating profit was broadly in line with prior year reflecting investment in network and infrastructure to support future growth.
- Toolstation UK’s new partly-automated 500,000 ft2 distribution centre in Pineham, Northamptonshire, which will drive long term operational efficiencies, is on track to open in Q3. The Group will be holding an investor event, focused on Toolstation UK, at Pineham on 28 September 2023.
- Proactive cost actions and continued cost discipline ensured that overhead inflation was mitigated
- Further progress on building a sustainable business with primary focus on decarbonisation
| £m (unless otherwise stated) | Note | H1 2023 | H1 2022 | Change |
| Revenue | 2 | 2,472 | 2,535 | (2.5)% |
| Adjusted operating profit[1] | 16(a) | 112 | 163 | (31.3)% |
| Adjusted earnings per share1 | 9(b) | 30.5p | 51.6p | (40.9)% |
| Adjusted ROCE excluding property profits1 | 16(e) | 8.1% | 11.8% | (3.7)ppt |
| Net debt before leases[2] | 12 | 274 | 306 | 32 |
| Net debt / adjusted EBITDA1 | 16(c) | 2.1x | 1.8x | (0.3)x |
| Ordinary dividend per share | 10 | 12.5p | 12.5p | – |
| Operating profit | 107 | 157 | (31.8)% | |
| Total profit after tax | 60 | 106 | (43.4)% | |
| Basic earnings per share | 9(a) | 28.6p | 49.7p | (42.5)% |
Nick Roberts, Travis Perkins Chief Executive Officer, commented:
“Market conditions have been challenging, which is reflected in both our first half performance and our outlook for the balance of the year. The Group remains focused on striking the appropriate balance between seeking to protect shorter term profitability, delivering our strategic objectives and being well placed to benefit when market conditions improve.
Given the market backdrop, we are relentlessly focused on meeting our customers’ needs in core categories and supporting our local branch managers to grow share of wallet, particularly with general builder and professional trade customers, by making it simpler and easier to transact with us through our digital channels and in our branches.
I am pleased with the continued progress we are making on the development of value-added services, as shown in the growth of Managed Services and Hire, and also with the market share gains coming through in Toolstation.
Whilst near-term trading is expected to remain difficult, we continue to work to position the Group to benefit from the long term structural drivers in our end markets. The opportunities presented by the requirement to decarbonise the UK’s built environment and address the shortage of both private and social housing remain significant and our unique portfolio of businesses, coupled with the development of innovative solutions for our customers, will enable the Group to deliver long term growth and create value for shareholders.”
