In This Article:
Investing.com -- Travis Perkins PLC's (LON:TPK) shares traded lower on Tuesday following its first-half results and a revision of their full-year (FY) EBITA guidance.
The results flagged ongoing market challenges and adjustments to future earnings forecasts.
At 5:31 am (0931 GMT), Travis Perkins was trading 0.7% lower at £874.
Advertisement: High Yield Savings Offers
For H1 2024, Travis Perkins reported a 6.1% decline in like-for-like (LFL) sales, worsening from a 3.7% decline in Q1. This decrease was driven by weak demand, with volumes down by 2.4% and negative pricing effects of -2.6%.
Adjusted EBITA for the half-year was £75 million, “broadly in line with our forecast,” said analysts at RBC Capital Markets.
The company has revised its full-year EBITA guidance to £150 million, down from the previous range of £160-180 million. This adjustment reflects ongoing market difficulties and includes expected losses of £16 million from Toolstation (TS) France.
However, Travis Perkins reported stronger-than-expected free cash flow (FCF) of £54 million, supported by inventory reductions and working capital inflow, RBC added.
The company has taken several steps, including reducing overheads by £19 million to mitigate cost inflation. Actions include the planned exit from TS France by year-end and a completed strategic review of TS Benelux, with measures in place to achieve breakeven by 2025.
Additionally, efforts are underway to optimize supply chains, procurement, and technology.
Management has revised its adjusted EBITA guidance downward to around £150 million (including £5-10 million in property profits) from £160-180 million (including £10 million in property profits).
“This is an underlying cut of -10% to consensus EBITA excluding property profits of £159m,” said analysts at UBS Global Research.
Despite the challenging market conditions, Travis Perkins’s long-term outlook remains positive. Analysts expect that the company's strategic actions, potential market recovery, increased housebuilding, and favorable election outcomes could drive future growth.
RBC Capital Markets views the company as having significant self-help potential and value, particularly through its Toolstation UK operations and high freehold market value.
UBS Global Research has set a neutral valuation on Travis Perkins with a price target of 790p, reflecting concerns over the company’s revised guidance and current market conditions.
Related Articles
Travis Perkins shares down on H1 results, lowered FY guidance
Sharpie-maker Newell moves more operations from China as tariffs loom
US transport safety board to hold hearings on Boeing 737 MAX 9 mid-air emergency