Travis Perkins’ Shares Fell 6.27%, Then Rallied on FY ’23 Results

The Travis Perkins plc (LON: TPK) share price alternated between gains and losses after releasing its full-year results for the year to 31 December 2023. In a year marked by complicated market dynamics, the company has focused on initiatives to revive profitability and improve cash flow while maintaining its competitive stance.

The critical collaborator for the construction sector experienced a decrease in group revenue by 2.7% compared to the previous year, which is attributed to a decline in new housing constructions and private domestic repair, maintenance, and improvement (RMI) sectors.

A mix of reduced sales volumes increased overhead costs, and a swift decline in commodity prices in the year's second half led to an adjusted operating profit of £180 million versus last year’s £295 million profit. 

Investments were made to secure and enhance market positions, resulting in market share growth for both Toolstation and Travis Perkins General Merchant divisions. The company significantly reduced non-branch expenses, saving £35 million annually.

The company is also evaluating the potential withdrawal from Toolstation France and reviewing strategic options for Toolstation Benelux. The firm is enhancing the Benchmarx branch network, focusing on integrated offerings in destination General Merchant branches and maintaining profitability in standalone locations.

Travis Perkins is continuing to streamline the legacy supply chain of Toolstation UK, bolstered by the successful launch of the new Pineham distribution centre. Profit improvements were also realised through simplifying organisational structures, reducing supply chain expenses, and leveraging new technological advancements.

The reported operating profit of £110 million versus 2022’s £285 million reflects the year's trading outcomes and includes adjustment costs of £60 million incurred in 2023 with approximately £16 million in cash. These adjustments are related to Toolstation France and Benchmarx impairments and restructuring efforts.

The company anticipates lower capital expenditure, with a projected £80 million for 2024. It is currently reviewing opportunities to optimise working capital. It was also successfully refinanced, ensuring a solid balance sheet with no financing obligations due until 2026.

Travis Perkins’ CEO, Nick Roberts, commented: “Ongoing economic challenges have significantly impacted our trading performance, driven by weakness in the new build housing and domestic RMI sectors, and compounded by deflationary pressures on commodity products. Faced with these challenges, we have invested to protect and build our leading market positions. With market conditions expected to remain a headwind through 2024, the business is fully focused on improving profitability and enhancing cash generation.” 

Travis Perkins share price. 

The Travis Perkins share price fell 6.27% to trade at 696.7p from Monday’s closing price of 743.3p.