Travis Perkins says long-term drivers remain “robust” despite EU vote blip

The company said the EU vote had created significant uncertainty in the outlook for its end markets but said it was “too early” to precisely make end market predictions.

On a positive note, it said long term drivers of RMI expenditure, which accounts for nearly 80% of the Group's revenues, remain robust.

Its half-year results published on August 2 show a 10% increase in pre-tax profits to £176m from revenue of £3.1bn – a growth of 5.8% on a year ago.

The general merchanting division’s revenue increased by 6.7%, with like-for-like sales up by 2.9% and adjusted operating profits up by 13% to £104m. This strong revenue growth was in part due to the conversion of 13 Keyline branches to Travis Perkins, the opening of 10 new Benchmarx branches and one extra trading day in the period.

After a strong first quarter, like-for-like sales growth slowed in the second quarter, owing to a number of factors including the deferral of projects ahead of the EU referendum.

A new branch, opened at Staples Corner in London, is trialling several new concepts, including extended in-day opening hours, seven-day opening, and a new counter format that maximises the range of products that can be held in store.

The consumer division, which includes Wickes and Toolstation, saw revenue growth of 10.5% on a year ago, with Wickes sales’ continuing to grow strongly, delivering significant market share gains.

The rate of secondary housing transactions remained strong through the first half of 2016, with the underlying rate of homeowner transactions remaining positive, with volumes improving through May and June.

However, Travis Perkins said if uncertainty arising from the referendum decision continues then this is likely to have an adverse impact on RMI, new construction and infrastructure spending.

The group has numerous strategies to deal with cost price inflation, including switching to UK sourced products, increasing sourcing direct from manufacturers and improving efficiencies, as well as passing genuine cost inflation through to customers where it cannot be avoided.