Shares in builders’ merchant Travis Perkins (TPK) climbed 3.4% to a new 12-month high of £15.40 following a positive third quarter trading update.
Like-for-like sales for the three months to the end of September were up 3.4% with a strong contribution from the Wickes retail business up 9.7% and an even stronger performance from the Toolstation division up 15.4%.
New chief executive Nick Roberts, who took over three months ago, praised his team's ‘solid performance despite trading conditions becoming incrementally more challenging through the summer’.
TOOLED UP
Despite a softer market in building supplies since mid-year, which resulted in a profit warning for building products firm SIG (SHI), the core Travis Perkins business and the merchanting unit managed to deliver like-for-like growth of between 1% and 2%.
The star of the show however was Toolstation which has clearly struck the right note with its trade-focused product ranges and the introduction of a five-minute ‘click & collect’ service.
Wickes also shone thanks to market share gains in the home improvement and DIY market while the Kitchen & Bathroom business increased the number of sales leads it converted into actual sales and carried out more installation work.
STRATEGY UPDATE
The process of de-merging the Wickes retail business from the more trade-focused units is on track for completion by the end of the second quarter next year.
However the sale of the Plumbing & Heating division, slated for later this year, has sensibly been put on hold due to what the firm called ‘the current unprecedented level of uncertainty’ around the economy.
The cost-cutting programme is progressing as scheduled, ‘reducing cost and complexity and enabling greater focus and more disciplined capital allocation’, and savings of £20m to £30m are expected by mid-2020.
It’s been a dramatic few weeks for investors in the building supplies firm. Shares slumped to £12 at the start of the month following the warning from rival SIG, then roofed over the last fortnight adding more than 25% as hopes of a Brexit deal have grown.
