Travis Perkins PLC (LON:TPK) left its expectations for 2018 unchanged after the building materials supplier reported first quarter sales growth despite adverse weather and difficult market conditions.
The company posted a 3% increase in like-for-like sales in the first quarter, driven by a 19.7% jump in in the plumbing and heating division.
The general merchanting and consumer businesses saw like-for-like sales fall 1.3% and 4.6%, respectively, reflecting the impact of poor weather conditions in February and March and weakness in the UK DIY market.
The so-called Beast from the East caused heavy snowfall and icy temperatures across Continental Europe and the UK in February and March.
In its first quarter trading update, Travis Perkins said sales of heavyside materials and Wickes outdoor products took the biggest hit from the Beast from the East.
Overall, adverse weather resulted in a 1.5-2% impact on like-for-like sales growth.
Tough market conditions
The group acknowledged that recent data on mortgage approvals, housing transactions, house prices and consumer confidence “remain mixed” with continued pressure in consumer facing businesses across the UK.
READ: Travis Perkins reports decline in 2017 profits amid 'challenging environment'
In response, the company is taking actions to reduce costs and improve efficiency while ensuring that it has the “flexibility to take further actions if necessary”.
“Adverse weather conditions have impacted sales across the Group in February and March, but our overall expectations for 2018 remain unchanged and are supported by our actions to reduce costs,” said chief executive John Carter.
“Whilst the mixed trading conditions in our markets are expected to continue in the near-term, we remain confident in the longer term outlook for the building materials market, with opportunities to grow and outperform through the investments we are making to develop or extend our strong customer propositions.”
Shares edged down 0.8% to 1,275p in morning trading.
Shares 'highly attractive', says Liberum
Liberum repeated a 'buy' rating and target price of 1,525p, saying it thinks the shares are "highly attractive" and sees a "compelling investment case for the contrarian".
The company's shares are close to five-year lows and analyst sentiment are very depressed, the broker said.
"Disappointments in 2017 should unwind fast and the positive highlights were overlooked," Liberum added.
"The outlook is stable, not catastrophic, and might actually brighten as real wage inflation turns positive again. We see over 20% total shareholder return upside to our target price of 1525p."