Travis Perkins PLC (LON:TPK) said it was shelving its dividend and “pausing” the demerger of its Wickes chain in preparation for a tough few months due to the impact of coronavirus.
Having made a “strong start” to 2020, the builders' merchant said the UK government’s social distancing advice will mean the trading environment is likely to “change quickly and materially in the coming weeks”.
As well as the suspension of the 33p final dividend, saving £83,2mln, and the Wickes spin-off, the FTSE 250 group assured that it has a “robust balance sheet”, with £185mln of cash in the bank as well as an undrawn bank facility of £400mln.
At the end of last year, Travis Perkins' net debt stood at £1.8bn but all but £344mln of this was related to property leases, with debt maturities “well spread with no immediate refinancing required”.
Travis Perkins said “plans are in place to balance the protection of profitability and preservation of operating cash flow with the long-term needs of the business”, in the event that sales volumes crash as a result of enforced store closures or a wider reduction in economic and market activity.
Operating costs will be cut “where sensible” and management will assess all capital expenditure requirements, inventory and other working capital, as well as making use of tax relief and other government measures as they become available.
The Wickes demerger, which had been expected before the end of June, will go ahead “swiftly when it is appropriate to do so”.
No financial outlook was provided for the year ahead.