1 March 2022
If you are covering Travis Perkins’ results, please see the following comment from Mamata Valechha, equity research analyst at Quilter Cheviot:
“Travis Perkins swung back into profit in 2021, with headline pre-tax profits increasing by 175% to hit £353m last year. Revenue growth was in line with expectations and earnings growth was slightly ahead of expectations, driven by higher property profits.
“Travis Perkins’ trade merchanting business performed well with a 28.2% year-on-year increase in like-for-like sales, driven by strong RMI demand, new house building continued investment in UK infrastructure.
“Price inflation accelerated through the year, with prices increasing by around 13% in the second half of the year, from around 4% in the first half. The group has managed this well by utilising their extensive supply chain to maximise product availability and providing price transparency to customers.
“Toolstation like-for-like revenue turned negative in the last quarter of 2021, which was mainly driven by the tough comparator given the DIY boost we saw last year, which is to be expected. That sales, sales were still up 26.4% on a two-year basis. It is important to note, however, that there is no inflation uplift benefit for Toolstation, given the fixed pricing model. Product price inflation may start to come through, but this would require the main competitors to3 also raise prices in order to remain competitive.
“The roll-out of branches in the Toolstation business remains a key driver for the stock. The group has opened an additional 70 branches in the UK, to push them to 530 overall, with another 60 expected in 2022
“The return of the P&H disposal proceeds is ongoing, with the buyback today extended from £170m to £240m, which will complete the programme.
“Management provided limited detail on guidance at this stage, but noted that lead indictors remain encouraging with improved levels of housing transactions, and the continued move to hybrid working and the growth in new housing developments are expected to support volumes in the group's core trade markets. Over the longer term, the requirement to expand and decarbonise the UK housing stock offers significant growth opportunities for the group.”
