Travis Perkins plc chief executive Nick Roberts (pictured) spoke of the significant impact of the coronavirus pandemic on the group’s first-half earnings but added that it had made tremendous progress and had “navigated Covid well” and would “come out stronger”.
He was speaking as part of a presentation of the group’s half-year results to June 30. Travis Perkins is the parent company for Wickes, Toolstation, Benchmarx, Tile Giant and City Plumbing.
Roberts referred to a significant impact on incomes, but said that cash performance had been outstanding. He said that the business had adapted its model and accelerated its digital enablement with significant improvements to the digital platforms of Wickes and Toolstation.
This against a backdrop of figures that reflect all too clearly the impact of the pandemic.
Total group revenue was down 20% (£672 million) from £3.48 billion in H1 2019 to £2.78bn this year. Like-for-like sales fell by 24.6% and adjusted profits nosedived by 80.9% from £220m last year to £42m in the first half of 2020.
Profits were impacted by a number of factors, included furlough costs of £65m, overheads and inflation (£20m), Toolstation investment (£12m) and Toolstation Europe losses of £9m.
Looking at some individual areas of the business, merchanting revenues were down 25.9% over last year at £1.38bn with profits down 75% to £35m
Toolstation revenues were up 37% to £285m but profits slumped by 90.8% to £1m. For Wickes and Tile Giant, revenues were 8.5% down at £636m and profits down 8.5% at £32m.In Plumbing and Heating, incomes were down 33.4% to £475 with profits down 133.3% from a profit of £24m in H1 2019 to a loss of £8m this year, but restructuring costs are expected to deliver £25m in annualised savings.
In the group as a whole, restructuring plans aim to save an annualised £120m and have targeted the closure of 165 branches across merchanting, above-brand costs rationalisations and 2,500 job cuts, most of which measures had been implemented by the end of August, saving £85m to date.
Commenting on the results, Roberts said: “While the pandemic has had a significant impact on our performance and our earnings are understandably down compared to 2019, we have performed exceptionally well in other areas, such as our cash performance, and showed great resilience as a business through the pandemic.
“We had a really good start to the year, with revenue growth of 2.4% up to March 18, but then experienced weakening of both revenue and operating profit as demand slowed during the pandemic. We were able to partially offset this by controlling and reducing our costs and by focusing on cash and with that we reduced our net debt by £300 million in he period – a truly fantastic result during the pandemic.”
Looking ahead, he added: “In light of the challenging outlook, in June we announced a major restructuring programme, which will deliver annual savings of over £120m. Our unwavering priority throughout this period has been the safety and well-being of our colleagues and our customers, while we have sought to maintain an essential service to all of our customers at all times.”
He spoke of their new trading models and work still to be done:
“Our progress through this period has been nothing short of remarkable, creating new contactless service models for our customers, enabling is to give them great service throughout the lockdown and beyond, using digital technology to the fore.
“There is still a huge amount to do and we have learnt many lessons, but we are further forward than where we planned to be. We are encouraged to see that the Government considers the construction industry as an engine for economic growth, but the value and the timing of the benefits of the schemes announced so far is unclear.”
He concluded on a cautiously optimistic note: “We remain cautious regarding the volumes in our business for the remainder of 2020, but we remain optimistic about the fundamental drivers in our industry, which remain strong. So while the economic outlook remains uncertain, we continue to navigate Covid well and we will come out stronger.”