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Travis Perkins, the builders’ merchant and DIY-supplier, announced like-for-like revenue up for 2016, but adjusted profit before and after taxation were down 0.3 and 2 per cent respectively.
The FTSE 250 company, demoted from the FTSE 100 in December, said in its full year earnings that business had been strong in the first half of the year, but that the third quarter had seen “weaker trading” before improvements in the fourth.
Total revenue for its general merchanting business was up 5.1 per cent year-on-year, to £2bn, although like-for-like growth was a more modest 1.7 per cent. Adjusted operating profit was up 4 per cent, to £207m. However, nearly all growth came in the first half of the year, with growth dropping to 0.5 per cent in the second half.
And consumer, its businesses which provide DIY supplies, saw like-for-like growth of 6.4 per cent, and adjusted operating profit up 6.3 per cent, to £101m.
While its consumer, contracts and general merchanting businesses saw combined profits outstrip the previous year, Travis was let down by its plumbing and heating, whose “unsatisfactory performance” prompted the company to begin restructuring.
In plumbing and heating, total revenue was down 0.9 per cent, with adjusted operating profit falling 15.2 per cent on the previous year – to £39m.
Of the embattled plumbing and heating division, which includes firms such as City Plumbing Supplies, Travis cautioned that “there remains considerable work to do to improve the Group’s customer propositions in order to maintain a competitive position in the market and enhance returns.” It promised a “comprehensive transformation plan” would be disclosed with interim results.
The group said that decline in the social housing sector, intense competition and online selling had put the plumbing and heating market under pressure.
Travis’ balance sheet also took a £235m hit through an “exceptional non-cash impairment charge”, mostly sustained against its plumbing and heating and tile businesses, and a £57m charge covering branch closures and other restructuring.
John Carter, Travis’ chief executive, called the UK’s macro-economic outlook “mixed”, adding:
The sharp decline in the value of Sterling since June 2016 has created cost pressures on imported goods and materials, and the expectations for secondary housing market transactions and growth in the RMI market have weakened. We have a proven track record of managing our cost base and took decisive action in October 2016, announcing a restructuring programme to close underperforming branches and improve supply chain efficiency.