Travis Perkins Regulatory News (TPK)

27 April 2018

Travis Perkins plc

Q1 2018 trading update – solid start to 2018 given challenging market conditions

Highlights

Solid start to 2018 with like-for-like sales growth of 3.0% and total sales growth of 2.4%Strong performance in Plumbing & Heating with like-for-like sales growth of 19.7%Underlying trading in General Merchanting and Contracts remains resilient in light of weather impactsOverall expectations for 2018 remain unchanged, with cost actions to drive cost efficiency and mitigate difficult market conditions

John Carter, Chief Executive, commented:

“We delivered solid like-for-like sales growth in the first quarter, with volumes across the Group broadly flat and pricing initiatives to recover on-going commodity driven price inflation. The turnaround in the Plumbing & Heating division continues to build momentum as our improvements take effect.

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. 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.”

Q1 2018 sales growth	General Merchanting(1)		Plumbing & Heating(1)		Contracts(1)		Consumer(2)		Group
Like-for-like sales		(1.3)%		19.7%		0.9%		(4.6)%		3.0%
Net new space and acquisitions		0.2%		(3.7)%		1.6%		1.5%		-
Trading day differences		(0.8)%		(0.9)%		(0.8)%		-		(0.6)%
Total sales		(1.9)%		15.1%		1.7%		(3.1)%		2.4%
Two-year like-for-like		(1.6)%		18.4%		13.1%		(1.8)%		5.8%

Total Group sales grew by 2.4% in the first quarter, with like-for-like sales growth of 3.0%. The combination of our Merchanting divisions (General Merchanting, Plumbing & Heating and Contracts) delivered total sales growth of 4.2% and like-for-like sales growth of 5.4%. Like-for-like sales in the Consumer division reduced by 4.6%, reflecting the poor weather conditions and the current weakness in the UK DIY market. Pricing activity across the Group in the first quarter primarily reflected the recovery of commodity-related inflation, particularly steel, copper and plastics.

Weather conditions caused considerable disruption across the UK in February and March, and adversely affected sales across the Group. Heavyside material sales in particular were impacted across the General Merchanting and Contracts divisions as well as outdoor product categories in Wickes, with an overall Group sales impact estimated at 1.5-2.0% of like-for-like sales growth. This was partially offset by a modest boost to Plumbing & Heating sales.

Excluding impacts from the adverse weather, General Merchanting like-for-like sales were positive, in line with expectations, and reflected good recovery of cost price inflation. The Contracts division continued to perform well against strong growth comparators from 2017. In the Consumer division, Wickes suffered from a declining UK DIY market reflecting weak consumer sentiment, although Kitchen & Bathroom showroom orders recovered relative to Q4 2017, broadly in line with Q1 2017. The transformation programme in the Plumbing & Heating division has continued at pace, with the benefits of improvements to the customer proposition delivering good growth in all channels; through the branch network, online and through the wholesale business.

In the Merchanting divisions, there was one fewer trading day in Q1 2018 than in Q1 2017. In the consumer division, the Q1 period ended on 31 March 2018, with two days of the Easter trading weekend included in the Q1 result. These two days contributed approximately an additional 1.4ppt to like-for-like sales growth in the Consumer division in the quarter.

Recent market lead indicators such as mortgage approvals, housing transactions, house prices and consumer confidence remain mixed, with continued pressure in consumer facing businesses across the UK. The Group is taking actions to reduce costs and improve efficiency, and ensuring that it retains the flexibility to take further actions if necessary. Assuming no further deterioration in market conditions, at this early stage of the year the Group is on track to meet its expectations for 2018.

Enquiries

Investor / analyst enquiries

Graeme Barnes | +44 7469 401 819 | graeme.barnes@travisperkins.co.uk

Zak Newmark | +44 7384 432 560 | zak.newmark@travisperkins.co.uk

Media enquiries

Toby Bates | Tulchan Communications | +44 207 353 4200

Footnotes

Like-for-like sales growth for the three month period ended 31 March 2018 compared to the three month period ended 31 March 2017 adjusted for the impact of extra trading day in the 2017 period. Total sales growth for the three month period ended 31 March 2018 compared to the three month period ended 31 March 2017 not adjusted for the impact of extra trading day in the 2016 period.Wickes like-for-like growth for the 13 week period ended 31 March 2018 compared to the 13 week period ended 1 April 2017. Wickes total sales growth for the 91 day period ended 31 March 2018 compared to the 91 day period ended 1 April 2017.