Building merchant’s boss says slump at ‘bottom of cycle and we’re waitng for it to improve’
New Travis Perkins chief executive Gavin Slark said trading remained subdued in the first two months of the year as the slump in construction activity continued.
Slark began work at the FTSE 250 listed building merchant giant at the start of the year and in his first results presentation this morning admitted: “This business has been cyclical for a long time. We’re at the bottom of the cycle and waiting for it to improve.”
Group revenue was down 1% to £4.6bn with pre-tax losses widening from £38m to £135m last year. Its overall loss was up from £77m to £177m.
Its merchanting business saw sales fall 2% to £3.7bn which it added had been hit by “the ongoing impact of depressed levels of UK construction activity”. Adjusted operating profit was down 18% to £122m.
But its tool retailer Toolstation UK saw revenue up 3% to £843m with adjusted operating profit up 57% to £33m.
Slark said its business had so far not been affected by the war in the Middle East but added some of its products shipped in from the Far East could be held by up the conflict.
Net debt during the year was reduced by £224m to £621m.
In a note, broker Investec said: “The trading backdrop this year looks challenging with higher macro risks given recent events in Iran. However, there is the potential to structurally improve the business and, with the help of a market recovery, to substantially improve financial metrics.”
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