TPK Travis Perkins Plc

 
 Travis Perkins (TPK) 
Travis Perkins: Travis Perkins plc - COVID-19 and Trading update 
 
28-Apr-2020 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
28 April 2020 
 
Travis Perkins plc - COVID-19 and Trading update 
 
Nick Roberts, Chief Executive, commented: 
 
    "In light of the COVID-19 emergency, we have established a new operating 
      model that has kept colleagues and customers safe, operating within 
      Government guidelines, and enabling branches across all of the Group's 
businesses to remain open. Moreover, we have provided essential services and 
      support to keep the nation's critical infrastructure maintained and 
 operational and the UK's homes warm, dry and safe during this time of need. 
 
  "We continue to adapt our operations, applying stringent social distancing 
 and using technology to enable contactless operations, and we are therefore 
    able to respond to the Government's call to ensure that the construction 
  industry can continue to deliver on crucial programmes and projects and be 
      an engine for future economic recovery. 
 
     "As we move forward we will continue to adjust our operations, with our 
    foremost priority to keep colleagues and customers safe and the industry 
      supplied with the materials it needs." 
 
      AGM 
 
    The AGM will take place at 9.30am today at the offices of the Company in 
   Northampton. As stated in the AGM Notice on 3 April 2020, in light of the 
 impact of the COVID-19 pandemic the AGM will be held with only the Chairman 
      of the Board and the Company Secretary & General Counsel present, who 
   together will form the quorum for the meeting, with no other attendees. A 
      live audio feed will be accessible to shareholders. 
 
      Business operations and trading 
 
    Since late March, the Group has been running a "service-light" operating 
  model, focusing on serving customers through remote, non-contact channels. 
 
     Throughout the early weeks of the lockdown, around a third of our total 
   Merchanting branches and around half of all Plumbing and Heating branches 
 were operating. These sites have been primarily running call and collect or 
direct delivery services to support essential construction programmes. These 
      include the construction of key NHS assets including the Nightingale 
    hospital network, the ongoing maintenance of national infrastructure and 
      support for the essential repair and maintenance of domestic homes. 
 
Wickes and Toolstation have been operating across the vast majority of their 
branch networks, with branches acting as fulfilment centres for transactions 
completed via digital channels for either direct delivery, or with essential 
     items being available for collection within a designated time slot. The 
      Wickes Kitchen & Bathroom design and installation service, usually 
      contributing around a third of Wickes sales, remains closed. 
 
      In the first three weeks of April, operating through the service-light 
model, Group total revenue was approximately one-third of the same period in 
      2019 on a comparable basis. 
 
      In recent weeks, the Group has been working closely with customers, 
      suppliers, trade bodies and the UK Government to develop safe- working 
      protocols which can be applied across the construction supply chain to 
      enable more activity to be carried out safely under lockdown. 
 
   Since 20 April, the Group has been carefully opening more of its Merchant 
      branch network, with branches continuing to operate the service-light, 
      non-contact operating model. This will give greater support to large 
   construction firms and subcontractors as they restart construction sites, 
and give smaller, local trade customers improved access to products. Revenue 
     performance in Wickes and Toolstation has continued to improve with the 
      businesses responding at pace to the changing nature of the trading 
      environment, reconfiguring to significantly increase the capability of 
      distribution networks to cope with the high levels of consumer demand. 
 
      Cost base mitigations 
 
   Actions have been taken to reduce and carefully manage the operating cost 
 base of the Group, with all businesses taking decisive actions to eliminate 
     discretionary spend. In addition, the Group has accessed the Government 
      support schemes which have been put in place. 
 
The closure of branches, particularly across the Merchanting businesses, has 
      led to the furlough of both front line branch teams and colleagues in 
  support functions. Altogether around half of the Group's 30,000 colleagues 
  were furloughed for the first three weeks of the lockdown. Colleagues have 
 been furloughed on full pay, with leadership teams and remaining colleagues 
      working hard to sustain high levels of communication to maintain team 
      cohesion and morale. 
 
  In addition, a decision was taken and announced internally on 7 April 2020 
      by the Board of Directors and the Group Leadership Team to voluntarily 
     reduce their salaries by 20% effective from 1 May for a period of three 
      months. 
 
The Group is benefitting from the business rates holiday, a saving of around 
       GBP90m for the Group on an annualised basis. 
 
      Cash management 
 
  The Group continues to act to reduce cash commitments in order to conserve 
  liquidity in the short-term, including benefiting from the deferral of VAT 
payments. Discussions have been held with landlords across the businesses to 
    move the timing of rent payments where possible, including moving rental 
      payments from quarterly in advance to monthly in arrears. 
 
      A rigorous review of capital expenditure has been carried out, with 
  discretionary capex not already committed being postponed until there is a 
greater degree of certainty around any future economic recovery. Maintenance 
    capex, which is primarily focused on the Group's vehicle fleet, has been 
      curtailed in line with the drop in revenue and delivered sales. 
 
Overall, the combination of current trading levels and the mitigations taken 
to control the overhead cost base means that for the first month of lockdown 
    the Group experienced an overhead cash outflow of around GBP50m. With more 
     Merchanting branches beginning to open with a corresponding increase in 
     sales volume and the continued progression of trading in the Wickes and 
  Toolstation businesses, the Group expects this cash outflow to reduce over 
      the coming weeks. 
 
      Robust financial position maintained 
 
 The Group continues to maintain a strong liquidity headroom position with a 
      robust balance sheet. 
 
  The Group has carried out detailed scenario analysis of liquidity headroom 
      with the key focus being near-term working capital management, and 
      specifically on the recovery of trade debtor values from customers. 
  Collections to date have been encouraging and are further supported by the 
      progressive opening of additional Merchanting branches. With the GBP400m 
  revolving credit facility (RCF) fully drawn, as at 24 April 2020 the Group 
  had GBP522m of cash on deposit. The Group maintains a good relationship with 
      its core lending syndicate. 
 
      Outlook 
 
The Group has adapted its business operations at pace, working with industry 
and Government to design and implement safe ways of working and accelerating 
      the use of technology for improved customer convenience, and greater 
 flexibility and simplicity. These actions have positioned the Group well to 
      support customers across the wider construction industry as a critical 
      economic engine for growth. 
 
Given the ongoing, considerable level of uncertainty, the Group is unable to 
provide an accurate assessment on trading and withdrew market guidance on 20 
      March 2020. Whilst the uncertainty continues with respect to both the 
   duration of the lockdown period and the eventual shape of the UK economic 
    recovery, the Group remains focused on near-term actions to maintain the 
      safety and welfare of its colleagues, customers and suppliers, and to 
      promote safe practices which can enable more construction work to 
      recommence. 
 
Q1 trading 
 
      As reported in our statement on 20 March, the Group delivered a good 
      performance in the first two and a half months of 2020, continuing the 
 positive momentum from 2019. Performance was then significantly impacted by 
the COVID-19 pandemic and the lockdown measures introduced in the UK from 24 
      March. 
 
Q1 2020 Merchanting(1) Toolstation(1) Retail(2)  P&H(1) Group(1) 
sales 
growth 
LFL             (8.7)%           9.1%      4.5%  (1.9)%   (3.8)% 
Sales 
Net new         (0.6)%          20.8%    (1.0)% (12.4)%   (2.0)% 
space 
 
and 
acquisi 
tions 
Trading           1.4%           1.2%         -    1.6%     1.2% 
days 
Total           (7.9)%          31.1%      3.5% (12.7)%   (4.6)% 
Sales 
growth 
 
      Enquiries: 
 
Travis Perkins                     Powerscourt 
Graeme Barnes                      Justin Griffiths / James White 
+44 (0) 7469 401819                +44 (0) 207 2501446 
graeme.barnes@travisperkins.co.uk  travisperkins@powerscourt-group.com 
 
Footnotes 
 
(1) Like-for-like sales growth for the three month period ended 31 March 
2020 compared to the three month period ended 31 March 2019. Total sales 
growth for the three month period ended 31 March 2020 compared to the three 
month period ended 31 March 2019. 
 
(2) Wickes like-for-like and total sales growth for the 13 week period ended 
28 March 2020 compared to the 13 week period ended 30 March 2019. 
 
ISIN:          GB0007739609 
Category Code: QRF 
TIDM:          TPK 
LEI Code:      2138001I27OUBAF22K83 
Sequence No.:  60696 
EQS News ID:   1030975 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

April 28, 2020 02:00 ET (06:00 GMT)

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