Travis Perkins posts resilient result amid wider slowdown in DIY sector

Travis Perkins has posted another sturdy trading performance in defiance of major economic uncertainty and inflationary pressures.

Britain’s largest building materials distributor revealed that total revenue climbed by 10.7 per cent in the three months ending September on the back of higher pricing and changes to its mix of products.

In response to increasing inflation, the FTSE 250 company has passed the rising cost of goods on to customers, helping to offset a 5.6 per cent drop in trading volumes during the last quarter.

Resilience: Travis Perkins, Britain’s largest building materials distributor, revealed that total revenue climbed by 10.7 per cent in the three months ending September

This also enabled the retailer’s merchanting and Toolstation businesses to achieve healthy sales growth of 11.5 per cent and 6.1 per cent, respectively.

The firm said that the merchanting division’s specialist merchants benefited from exposure to large subcontractors working on infrastructure schemes, industrial maintenance and new build projects.

Its general merchant arm continued to experience a healthy level of orders from big repair and maintenance builders, although it observed ‘some slowing of demand’ among smaller trade customers.

In spite of this, Travis Perkins said trading at its merchanting operations successfully outperformed the wider sector and remained consistent throughout the period.

Nick Roberts, the firm’s chief executive, said: ‘We continue to benefit from our diverse end market exposure from small independent builders through to large contractors delivering national infrastructure projects.’

The group also saw stronger sales in its Toolstation power tools and hardware arm, having seen a fall in orders over the first half of the year as demand normalised back towards its core trade customers.

Rebound: Travis Perkins also saw stronger sales in its Toolstation power tools and hardware arm, having seen a fall in orders over the first half of the year

Other companies in the DIY products and home improvement sectors have seen sales weaken in recent months amid a worsening economic backdrop and pressure on disposable incomes.

Prior to these recent troubles, many of them had profited from a boom in construction activity after the first Covid-19 national lockdown ended across the UK in the summer of 2020.

Onerous coronavirus restrictions and the rapid rise of remote working caused Britons to spend far more on sprucing up their homes.

Further boosts were provided by the UK Government bringing in a temporary stamp duty holiday, low interest rates on mortgages, and an increasing desire among many to live in more spacious properties.

These structural tailwinds have largely dissipated, and many firms within the sector have seen their profits and share prices sink, including B&Q owner Kingfisher and Wickes, which demerged from Travis Perkins last year.

Yet while Travis Perkins shares have also slumped in value, CEO Nick Roberts said the group’s future trade should gain from countries moving to carbon neutrality and introducing new safety regulations.

However, AJ Bell investment director Russ Mould expressed less optimism about the firm’s short-term performance, saying: ‘With mortgage costs shooting up, there is a fear that activity in the housing market will stall.

‘Traditionally, a key sales catalyst for building products suppliers has been people moving house as they want their new home to look smart. So, while Travis Perkins’ latest update provides some relief that the sector is not grinding to a halt, it is by no means in safe territory.’

The company forecasts full-year operating profits to be somewhere in the middle range of present market expectations of £304million to £340million. 

Travis Perkins shares were up 0.4 per cent to 795.8p during the late morning on Thursday, meaning their value has declined by almost half in the past 12 months.