Travis performance in depth
Published: 21 February, 2013
Travis Perkins results posted yesterday reveal the sharp contrasts in the building material supply market. Travis Perkins’ specialist civils business Keyline was one of the group’s star performers last year, with profits up 20.2% from £26m to £32m and turnover up to £604m from £582m.
Keyline was boosted during the year by the failure of its main rival Burdens.
Travis Perkins says: “The failure of the largest civils merchant brought some short-term benefit to Keyline as both customers and suppliers sought to put more business our way.”
This is in marked contrast to Travis Perkins' consumer faced business, Wickes where like-for-like sales dropped 7.6% in the first seven weeks of 2013. This compares to a like-for-like fall of 5.6% last year.
The consumer division made £65m ‘adjusted segment profit’ in the year to December 31, up 41% on last year as the DIY retailer focused on “careful margin management, strong overhead control and targeted investment”. Turnover in the consumer division increased 13% to £1.15bn, driven by the Toolstation acquisition.
If Wickes sister retailer Toolstation is excluded from the 2012 result, divisional turnover was flat year-on-year, whilst profits increased by 26.5%.
Travis Perkins said: “Our consumer division has significantly outperformed in 2012, with the Wickes, Tile Giant and Toolstation businesses all producing excellent results. The consumer division markets were the hardest hit of any that our divisions operate in, so that makes the result achieved in 2012 even more encouraging.”
Wickes kept costs down by “changing the store colleague structure late in 2011 and from re-targeting marketing spend”.
Joseph Robinson, lead consultant at Conlumino, said: “Wickes is a good retail business, with a loyal customer base buying into its strong competitive advantages, namely: low prices, differentiated own-label ranges and its customer service credentials. Moreover the last couple of years have seen the business make some very positive strides in new product areas – such as kitchens and bathrooms– where capacity falling out of the market has created opportunities.
“Nonetheless a 7.6% decline in like-for-like sales during the first seven weeks of its 2013 financial period – albeit impacted by poor weather and tough comparatives – point to another tough year ahead. While it’s difficult to pinpoint many fundamental issues with Wickes’ current strategy, until core markets stabilise, its performance is likely to continue to zig-zag.”
Group results for Travis Perkins show pre-tax profit edged-up to £299.9m for the year to end December from £296.7m last time as revenue climbed to £4,844.9m from £4,779.1m.