Weak UK construction market hits sales, earnings at Travis Perkins

(Sharecast News) - Travis Perkins warned market conditions remained subdued on Tuesday, as it posted a slide in sales and saw losses balloon. Revenues at the building materials distributor fell 0.9% in the year to 31 December, or by 0.3% on a like-for-like basis, to £4.6bn, with adjusted operating profits sliding 12.5% to £13.43m.

It swung to an operating loss of £97m, compared to a £2m profit a year previously, while pre-tax losses widened to £134.7m from £38.4m.

Driving the fall in revenues was weak trading in merchanting, Travis Perkins' largest division, which has been hit hard by prolonged weakness in the UK construction sector. Revenues fell 1.7% over the year, to £3.7bn, although sales did pick up over the second half. In contrast, retail arm Toolstation saw revenues climb 2.7% to £843m.

The company was further hit by operational issues during the year as it transferred to a new IT system.

Looking to the current year and the FTSE 250 firm said the trading environment remained "subdued".

However, new chief executive Gavin Slack said: "We have made significant operational progress for the past year. We have a fully resourced senior management team in place, have successfully overcome the difficulties associated with implementing a new IT system and have taken action to reduce the administrative overheads in our central and regional teams.

"It is the strength of our balance sheet that now provides the necessary resilience and flexibility to underpin our competitiveness in what remains a challenging market backdrop for UK construction activity."

Industry veteran Slack, most recently chief executive of rival SIG, joined Travis Perkins in January. He replaced Pete Redfern, who stepped down a year ago due to ill health.

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