- Weak prices and volumes hit sales
- FTSE 250 firm swings to pre-tax loss for 2024
- 2025 guidance below expectations
Luckless shareholders in builders’ merchant Travis Perkins (TPK) saw their shares hit a 15-year low after the firm posted a loss for 2024 and warned profit this year would miss forecasts due ‘challenging’ trading conditions.
The stock price fell 55p or 10% to 495p, taking out the post-pandemic low in 2020 and marking the lowest point for the shares in more than 15 years.
TOUGH TRADING IN 2024
The Northampton-based firm, which had delayed its results by a week to allow the auditors more time, swung to a pre-tax loss of £38.4 million from a profit of £121 million the previous year on a 5% drop in revenue from £4.84 billion to £4.61 billion.
The group blamed price deflation, a ‘continued decline’ in market volumes and weakness in its Merchanting segment for the fall in sales, which despite better cost discipline pushed operating profit down from £161 million to just £2 million and forced it into losses at the pre-tax level.
On the plus side, there was good progress in the Toolstation business which increased operating profit by almost 50% thanks to strong sales, improved gross margins and supply chain and overhead efficiencies.
New chair Geoff Drabble, the former chief executive of FTSE 100 equipment rental group Ashtead (AHT), admitted however there were ‘a number of areas where the business needs to refocus and change the way it operates’.
Former chief executive Pete Redfern, who retired due to ill health, had already taken some initiatives, and the priority now is to ensure work to improve operations ‘continues at pace,’ added Drabble.
The final dividend was raised from 5.5p to 9p per share but the total payout for the year was still only 14.5p against 18p previously.
TALKING DOWN 2025
The group had ‘a mixed start’ to the current year, with ‘challenging trading conditions’ in Merchanting as volumes continue to decline but positive results at Tootstation which ‘continues to deliver good growth’.
The rate and pace of an overall recovery in construction is still far from certain and is likely to need further cuts in interest rates and an increase in consumer confidence, according to the firm.
As a result, and taking into account the operational turnaround under way, 2025 adjusted operating profit is likely to be in line with last year, which is a downgrade to previous guidance and to market expectations.
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