As we progress through this pandemic and we begin to look at life after restrictions are lifted, we are beginning to understand the toll the crisis has taken on our sector and companies in connecting sectors through their 2020 full-year results. Last week I reported on the Taylor Wimpey figures, which you can read here, which laid out in greater detail the extent of the hit taken in the first half of 2020.
This time we look at Travis Perkins.
What you need to know
If you want to read the 37-page report click here. If you’re just passing through, here are the highlights from the report:
- Continued progress on strategic agenda across digital enablement, customer fulfilment, process simplification and branch network rationalisation despite the challenges of Covid-19
- Toolstation strong outperformance maintained with like-for-like growth of 22.2%; branch rollout continues at pace in UK and Europe
- Robust H2 recovery in Merchanting and P&H driven by RMI demand
- Wickes taking market share in core DIY with like for like revenue growth of 19.3%**; demerger process recommenced
- Strong free cash flow generation; covenant net debt reduced by £304m to £40m; successful refinancing of September 2021 bond
- ** On a calendar year basis. For the 52 weeks to 26th December 2020 Wickes Core like-f or-like sales were +18.8%
And here are the figures that matter:
Credit: Travis Perkins
Like most, the company took a battering in 2020, especially in H1 as the emergence of the pandemic and the lockdown measures imposed to keep it at bay took their toll. However, whilst the major metrics show a sharp fall from 2019 levels, the drop isn’t quite as drastic as that seen in other reports. DIY and home improvements have been incredibly busy sectors since mid-2020 with homeowners investing in their homes far more due to narrowed spending options. We know this to be the case from our own experience in the fenestration industry.
Travis Perkins owns stores like Wickes, which have seen very high demand as the public seeks to update the places they have spent so much time in over the past year.
Still, earnings per share, profit and operating profit have all been hit badly for 2020. Inevitable considering the scale of the upheaval of the UK economy. However, with demand remaining high across the board for construction and home improvement sectors, 2021 looks as though it will be a very different year to to 2020.
Here are the financial highlights:
- Total revenue from continuing businesses returned to growth in H2 at 1.4%*, demonstrating the resilience of the Group’s business models
- Adjusted operating profit of £227m reflecting lower volumes partially offset by actions to reduce operating costs, including both short term controls and acceleration of longer-term plans, coupled with appropriate government support in the merchant businesses
- Delivered £120m annualised cost savings with the focus on strengthening the core business by closing smaller, subscale branches and delayering management
- Net adjusting items of £140m, primarily relating to the restructuring programme
- *Total Group revenue excluding Tile Giant and Primaf low F&P which were disposed during 2020. Toolstation Europe is included as if fully consolidated
for both 2019 and 2020.
Travis Perkins CEO Nick Roberts commented:
2020 was a year of unprecedented challenges and I am full of admiration for the energy and determination of our colleagues to ensure the safety of our customers, suppliers and each other.
Despite these challenges, we have shown great agility and versatility in adapting our working practices, further digitalising our engagement with customers and reshaping our business to suit the changing demands of our markets.
Our teams have also been able to make excellent progress on a number of key initiatives supporting our strategic objectives, particularly around simplifying commercial deals and refining our pricing architecture, which will drive future benefits.
In addition, I am pleased today to be able to confirm that the process to demerge Wickes has recommenced. The Wickes digitally-led model has proved highly effective during the pandemic and the business is in great shape to embark on its journey as a standalone entity.
Whilst uncertainty remains, we have seen a good recovery through the second half which gives us confidence that the fundamental drivers in our markets are robust. The continuing progress against our strategic plans leaves the Group well placed to outperform in those markets.
The biggest news to come from this is that we learn that Wickes is about to be an individual company away from the Travis Perkins group. Wickes has indeed done very well and it has embraced a digital model to build it to the position where it is now.
You can read the full report from Travis Perkins for 2020 here.
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