Builders' merchant Travis Perkins PLC (LON:TPK) reported more encouraging trading in recent months, regaining ground on rivals and making progress on the sale of its plumbing arm.
Despite citing continuing “uncertain market conditions”, Travis Perkins said group like-for-like sales jumped 7.3% in the first quarter, with total sales growth of 5.4% although it was against an easy comparative versus last year's colder and wetter start.
LFL sales growth were up 10.6% in Merchanting, Toolstation up 19% and a good recovery from the Wickes retail arm, up 10.5%.
Chief executive John Carter said the strong sales growth reflected both a focus on excellent customer service and the weak start a year ago. “This performance is all the more encouraging given the impact of the on-going political uncertainty on our end markets.”
Toolstation reported 25% total growth amid network expansion and as existing stores mature, while Wickes grew both core DIY and showroom categories, with a turnaround in kitchen and bathroom performance.
The work to separate plumbing and heating operations ahead of a potential sale was “progressing to plan” and Carter said this is expected to be completed in the second quarter. The division endured a slowdown in sales in the quarter due to the milder weather conditions compared to last year.
He added that actions to improve service to trade customers and to simplify the group were “well underway”, with cost reduction expected to meet the targets set for this year.
“Overall expectations for the group in 2019 remain unchanged,” Carter said.
Rival builder merchant also Grafton updated on trading on Wednesday, saying the UK repair, maintenance and improvement market continues to be “relatively subdued”.
Broker Liberum said an “increasingly competitive” Travis Perkins was a growth threat to Grafton, seeing the market as “resilient” and self-help activities “on track”.
Analysts said TPL shares “look good value”, on 12.5 times full year earnings and a free cash flow yield of over 8%, so raised their target price from 1450p to 1600p, “based on rising returns and less need for caution than a few months ago”.