Travis Perkins and Grafton results “solid” despite mixed market backdrop7 March 2019
Merchanting giants Travis Perkins (TP) and Grafton Group have reported solid annual results despite acknowledging a weaker market backdrop.
TP said the UK DIY market had been particularly challenging in 2018 due to both macro and competitive pressures but its Wickes DIY business and the core general merchanting division both performed better in second half of 2018.
TP reported 2018 full year sales revenue of £6.8bn, up 4.8% on 2017, with adjusted operating profit declining by 1.3% to £375m (2017: £380m).
A £246m non-cash impairment against the goodwill in Wickes in the first half of the year and restructuring costs across the group were among items leading to a group operating loss of £22m (2017: £327m profit).
TP’s general merchanting division recorded an adjusted operating profit of £179m (2017: £183m). The south-east was most heavily impacted by the challenging macro environment, with declining house prices and significantly lower secondary housing transactions.
The consumer division (Wickes and Toolstation) saw sales revenue of £1.6bn (2017: £1.58bn) and a 15.9% decline in adjusted operating profit to £69m. Kitchen and bathroom showroom sales were hit hard in H1.
TP said long-term drivers of market growth remain favourable, citing the need for more new homes and under-investment in RMI.
Grafton’s 2018 annual results show sales revenue increased by 9% to £2.9bn. Profit before tax grew 17% to £181.3m. Its UK merchanting division saw sales revenue up 7.7% to £1.98bn, while adjusted operating profit grew 11.9% to £114.7m.
Buildbase experienced mixed trading conditions in the first half of the year, with activity recovering in the second half.
Overall revenue growth was driven by materials price inflation with volumes remaining broadly flat. Irish merchanting sales revenue increased by 9.3% to £441.1m, with operating profit up 16.9% to £41.5m.
An increase in the supply of building materials to all phases of house building was a key contributor to revenue growth. Grafton predicts activity in the UK merchanting market to be slightly weaker in 2019.
A small increase in the supply of new homes is anticipated.