Shares in builders’ merchant Travis Perkins (TPK) climbed 2% to £12.44 on Thursday, out-performing a FTSE 100 index which was 0.2% lower, as its third quarter trading update showed a continued recovery in demand.
Group like-for-like revenues rose 3.9% in the quarter led by strong sales to the repair, maintenance and improvement (RMI) sector which drove impressive gains at the Wickes retail business and the Toolstation trade business.
Wickes recorded an 18.3% increase in like-for-like sales in the quarter, while Toolstation recorded even stronger growth of 25.5% as the DIY and home improvement markets soared after lockdown.
In contrast the Merchanting business, which supplies the residential and commercial building sectors, saw a drop of 3.1% in like-for-like revenues due to the slow pace of recovery since lockdown and temporary site closures.
The firm was able to mitigate some of the lost trade from its closed sites by migrating sales to nearby sites, which limited the fall in like-for like sales, and it said there were ‘signs of increasing workflow as underlying demand strengthens’ in the new-build housing and commercial markets, but activity levels are still well below last year.
Liquidity remains strong, with £580 million of cash on hand and total headroom of £980 million including banking facilities.
While the outlook remains cloudy, the firm believes that if current volume trends continue and there are no further national lockdowns group earnings before interest, taxes, depreciation and amortisation (EBITDA) for the full year should be ‘in the upper half of the current range of analyst expectations’ of £220 million to £260 million.
