Robust revenue growth for Travis Perkins amidst difficult market conditions

Travis Perkins plc has reported a resilient trading performance in the face of materials cost inflation and rapidly changing market conditions, which have forced it to make some “difficult decisions”.

The firm, a leading partner to the construction industry, demonstrated robust revenue growth of 8.9%, and said it had “diligently managed” elevated levels of materials cost inflation.

Announcing its full year results for the year to 31 December 2022, the firm declared it had been forced to make some difficult decisions in response to the “weaker trading environment”, but added it was continuing to invest in its strategic growth programmes.

Its financial results show an operating profit of £295m, amidst lower year-on-year property profits and a £15m charge related to its restructuring activities in Q4.

Nick Roberts, chief executive officer of Travis Perkins said the “resilient” trading performance in 2022 was testament to the capability of staff and the strength of its “market-leading propositions”. 

“I would like to thank our teams for their hard work throughout the year and their flexibility to meet customer needs amidst rapidly changing market dynamics,” he said.

“In the second half of the year we made some difficult decisions in response to the weaker trading environment and we continue to be watchful of market trends, working closely with our customers and suppliers to stay on the front foot. 

“Investment continues in our strategic growth programmes including selectively exploring new destination branches for the Travis Perkins General Merchant, rolling out Toolstation in both the UK and Europe and investing in growing our value-added services, notably Hire, Benchmarx kitchens and our Staircraft business, always being mindful to flex the pace of the programme to reflect market conditions.”

He added that whilst it is early in the year and “macroeconomic uncertainty remains”, he expected Travis Perkins to continue to remain resilient in the year ahead. 

The financial report revealed proactive cost actions were expected to deliver benefits of around £25m in 2023.

The firm has been buoyed by a solid performance from Travis Perkins General Merchant, with further share gains, which were driven by a focus on the enhancement of digital capability and the expansion of value-added services, primarily across Hire, Benchmarx kitchens and Managed Services.

The Group’s specialist distributors – BSS, Keyline and CCF also put in a strong performance in 2022 and Staircraft has now been integrated and is enhancing the Group’s housebuilder proposition.

Toolstation also returned to good growth and the firm made significant investment in expanding infrastructure across both the UK and Europe.

Speaking optimistically about the year ahead, Mr Roberts also pointed to opportunities presented by the drive towards net zero and outlined the firm’s commitment to being at the forefront of decarbonising the construction industry.

In 2022, the firm made positive progress towards sustainability targets, notably a 34% reduction in Scope 1 & 2 carbon emissions during the year.

“The combination of our diverse end market exposure, appropriate cost actions and further market share gains driven by continued strategy execution, will enable the Group to deliver another resilient trading performance in the year ahead,” said Mr Roberts.

“As a market-leading distributor of building materials products, we continue to benefit from long-term strategic growth drivers in our markets including new environmental and safety legislation and commitments from both public and private sector customers to deliver against net zero targets. 

“We are committed to being at the forefront of both decarbonising the construction industry alongside developing the next generation of talent to create value for all of our stakeholders.”

As part of its annual results, Travis Perkins reported adjusted earnings per share of 94.6p with lower operating profit partially offset by reduced share count.

Its total ordinary dividend increased to 39.0 pence per share, compared to 38 pence per share in 2021.

In addition, it demonstrated good cash conversion at 67% and said lease-adjusted leverage (net debt / EBITDA) of 1.8x “remains comfortably within target range”.