Travis Perkins plc has revealed its results for the first six months of 2022 and reports a “good first half performance driven by operational and strategic delivery”.
The Summary of the report notes that the Group has “continued to make good progress in the first half of 2022, both in terms of operational performance and strategic development towards the ambition of becoming the leading partner to the construction industry”. It adds that the focus of the Group’s businesses “remains on deepening trade customer relationships by delivering convenient service propositions, both physical and digital, and on elevating customer relationships through the provision of solutions and value-added services that take time, cost and carbon out of customers’ construction processes”.
The Group’s share buyback programme to conclude the return of the full proceeds from the Plumbing & Heating (P&H) disposal to shareholders was completed in May 2022 whilst its “robust balance sheet provides the flexibility to invest in growth opportunities”.
Business performance
Travis Perkins plc recorded first half revenue of £2,535m, up 10.3%. The report also notes that “following rapidly increasing inflation throughout the second half of 2021, the Group’s businesses have again successfully managed further significant materials cost price increases in H1 2022 as well as inflationary pressures on overheads”.
Adjusted operating profit of £163m was (0.6)% behind prior year which is described as representing “a good performance against a strong comparator period which included the impact of both the rapid recovery of the domestic RMI market, from March 2021 onward, and high levels of DIY activity through the first half of 2021”.
The Group set out a range of growth opportunities at a Capital Markets Update in September 2021 and reports its focus has been on a combination of rollout for the proven concepts alongside a “test and learn” approach for new strategic initiatives. During H1, a net 42 new branches were added, with six more remodelled or relocated. In line with its strategic priorities, the majority were in Toolstation and the General Merchant, including Benchmarx, but capital is also being deployed into TF Solutions to build scale and capability.
The Group reports it also sees further growth potential through the provision of “value-added services in addition to the core distribution offer and, alongside the network growth, further investments have been made in developing the tool hire and Managed Services propositions whilst Staircraft represents an exciting opportunity to offer another market leading service to our customers”.
In addition, the role of technology “remains key to the Group’s development and the recently implemented delivery management system and customer Apps offer a best-in-class digital experience to our customers alongside providing data that enables it to communicate more effectively with customers and drive internal efficiency benefits”.
The Group’s balance sheet “remains in good health” with covenant net debt of £383m (31 December 2021: £87m). The results state that the increase in net debt of £296m reflects the completion of the share buyback programme to return the proceeds of the P&H disposal to shareholders (£172m) and seasonal working capital outflow together with the increase in the debtor book driven by inflation-led sales growth. At 1.75x net debt / EBITDA (on a rolling 12 months basis), operating leverage (on an IFRS16 basis) “remains comfortably within the guided range of 1.5x – 2.0x providing the Group with a high level of financial flexibility”.
Nick Roberts, Chief Executive Officer, commented: “The Group has delivered a good performance during the first half of the year, once again demonstrating the capability to navigate challenging market conditions. Our Merchant businesses continue to perform well, taking market share and extending their market leading positions by developing the customer proposition to meet changing requirements within their respective markets.
“Toolstation’s customer base returned to its core trade customer in the period following exceptional trading during the pandemic. We have made great progress in enhancing the trade offer in Toolstation and customers have responded positively. We remain as confident as ever in the long term growth potential of the business and in our UK investment programme, whilst also increasing investment in Toolstation Europe to take advantage of the opportunities we see in those markets.”
He added: “Whilst we are cognisant of the current macroeconomic uncertainty, our diverse end market exposure, broad trade customer base and strong balance sheet provide resilience against changes in market conditions. The strong performance of our Merchant businesses is set to continue into the second half, driven by our agility in managing inflation and by our leading service propositions. This will be offset by a combination of the normalisation of Toolstation’s customer base and the increased investment in the Toolstation growth opportunity in the UK and Europe. As a result, we expect the Group overall to deliver a full year performance broadly in line with market expectations.”
Click here for the HY 2022 results presentation from www.travisperkinsplc.co.uk
Segmental performance
Merchanting
| H1 2022 | H1 2021 | Change | |
| Total revenue | £2,159m | £1,905m | 13.3% |
| Like-for-like growth | 11.7% | 47.3% | |
| Adjusted operating profit* | £170m | £156m | 9.0% |
| Adjusted operating margin* | 7.9% | 8.2% | (30)bps |
| ROCE (12 month rolling)* | 16% | 14% | 2ppt |
| Branch network** | 784 | 781 | 3 |
* Excluding property profits
** 2021 branch network figures for comparison are taken at 31 December 2021
Toolstation
| H1 2022 | H1 2021 | Change | |
| Total revenue | £376m | £394m | (4.6)% |
| Like-for-like growth | (10.6)% | 29.8% | |
| Adjusted operating profit* | £(8)m | £10m | (180.0)% |
| Adjusted operating margin* | (2.2)% | 2.6% | (480)bps |
| ROCE (12 month rolling)* | 1% | 4% | (3)ppt |
| Branch network (UK)** | 549 | 530 | 19 |
| Branch network (Europe)** | 143 | 123 | 20 |
* Excluding property profits
** 2021 branch network figures for comparison are taken at 31 December 2021
| Memo: | |||
| UK adjusted operating profit | £7m | £20m | (65.0)% |
