Travis Perkins’ business remains resilient despite widespread fragility in the DIY sector and rising cost dynasties.
- Travis Perkins said sales jumped 10.7% in the quarter to September
- Both retailers and Toolstation arms have seen good sales growth
- UK home improvement sectors have seen weak sales in recent months
Travis Perkins posted another strong trading performance in defiance of significant economic uncertainty and inflationary pressures.
Britain’s largest distributor of building materials revealed that total revenue rose by 10.7 per cent in the three months to September on the back of higher prices and changes in the product mix.
In response to rising inflation, the FTSE 250 has passed on the increased cost of goods to customers, helping to offset a 5.6 percent drop in volumes over the last quarter.
Flexibility: Travis Perkins, Britain’s largest distributor of building materials, revealed that total revenue rose 10.7 per cent in the three months to September.
This also enabled the retailers and Toolstation business to achieve healthy sales growth of 11.5 percent and 6.1 percent, respectively.
The group said the trade division’s specialty traders have benefited from exposure to major subcontractors working on infrastructure schemes, industrial maintenance and new construction projects.
The dealer’s general arm continued to experience a healthy level of demand from major repair and maintenance makers, although it did note “some slowdown in demand” among smaller commercial customers.
Despite this, Travis Perkins said trading in its trading operations successfully outperformed the broader sector and remained flat throughout the period.
“We continue to benefit from our diversified end market exposure from small independent builders to large contractors delivering national infrastructure projects,” said Nick Roberts, CEO of the company.
The company also saw stronger sales in its power tool and hardware arm, which saw lower orders during the first half of 2022 as demand returned to core business customers.
Recovery: Travis Perkins also saw stronger sales in its Toolsstation and hardware arm, which saw lower orders during the first half of the year.
Other companies in the DIY and home improvement sectors have seen weak sales in recent months amid a worsening economic background and pressure on disposable income.
Prior to these latest problems, many of them had benefited greatly from the construction boom after the first national Covid-19 lockdown across the UK ended in the summer of 2020.
Strict coronavirus restrictions and a rapid rise in remote work are causing Britons to spend more on beautifying their homes.
Further boosts have been provided by the UK government with the introduction of temporary leave for stamp duty, lower interest rates on mortgages and a growing desire by many to live in more spacious properties.
Those structural tailwinds have largely dissipated, and many companies within the sector have suffered lower earnings and stock prices, including B&Q owner Kingfisher and Wickes, which split from Travis Perkins last year.
However, while Travis Perkins’ stock value has also fallen, CEO Nick Roberts said the group should in the future benefit from countries introducing new environmental and safety regulations.
However, Ross Mold, chief investment officer at trading platform AJ Bell, was less optimistic about the retailer’s short-term prospects, saying: “With mortgage costs rising, there are fears of a shutdown in the housing market.
Traditionally, the main sales catalyst for building product suppliers has been people moving their home because they want their new home to look smart. So while the recent update by Travis Perkins offers some relief that the sector isn’t down, it’s by no means in a safe area.
The company expects full-year operating profit to be somewhere in the mid-range of current market expectations of £304 million to £340 million.
Travis Perkins stock It rose 1.7 percent to 806.4 pence before trading closed Thursday, meaning its value has nearly halved in the past 12 months.
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