CHALLENGING market conditions mean a focus on balancing short-term profitability with remaining on track to achieve long-term strategic objectives, says the chief executive of building supplies plc Travis Perkins.
Nick Roberts was speaking after the Northampton-headquartered firm announced its half-year results for the first six months of 2023, with a 31% drop in operating profit off the back fo a 2.5% decline in revenue.
Trading is expected to remain “difficult” for the rest of the year, Mr Roberts said. But Travis Perkins is making moves to maintain its market position as it eyes new longer-term opportunities.
“Market conditions have been challenging, which is reflected in both our first half performance and our outlook for the balance of the year,” Mr Roberts pictured below said. “The group remains focused on striking the appropriate balance between seeking to protect shorter-term profitability, delivering our strategic objectives and being well placed to benefit when market conditions improve.”
Revenue for the period January-June 2023 fell by £63 million for the same period in 2022 to £2,472 million, leading to a reduction in adjusted operating profit to £107 million from £157 million. Earnings per share fell by 42.5% to 28.6p.
Travis Perkins’ full-year profit forecast remains at around £240 million.
Customer demand across the company’s commercial, industrial, infrastructure and public sector markets remained strong but performance had been hit by significant weakness in new build housing and private domestic RMI markets.
The Toolstation division reported market share gains, with revenue up by 9%. Operating profit was broadly in line with the previous year, reflecting investment in network and infrastructure to support future growth.
Toolstation UK’s new partly-automated 500,000 sq ft distribution centre at Pineham, next to M1 junction 15A, is expected to drive long-term operational efficiencies and is due to open in the autumn, with an investor event scheduled for September 28.
Proactive cost actions and continued cost discipline ensured that overhead inflation was mitigated.
Travis Perkins is focusing on simplifying the purchase process for customers both online and in its branches, Mr Roberts said. “Given the market backdrop, we are relentlessly focused on meeting our customers’ needs in core categories and supporting our local branch managers to grow share of wallet, particularly with general builderand professional trade customers.
“I am pleased with the continued progress we are making on the development of value-added services, as shown in the growth of managed services and hire, and also with the market share gains coming through in Toolstation.”
Trading over the next few months is expected to remain difficult but, looking ahead, longer-term progress in key markets is the target, he added. “The opportunities presented by the requirement to decarbonise the UK’s built environment and address the shortage of both private and social housing remain significant and our unique portfolio of businesses, coupled with the development of innovative solutions for our customers, will enable the group to deliver long-term growth and create value for shareholders,” Mr Roberts said.