Travis Perkins halts sale of plumbing and heating unit amid ‘unprecedented’ uncertainty
Travis Perkins has put the sale of its plumbing and heating business on hold due to an “unprecedented level of uncertainty” in the market.
The building materials distributor had decided to tell the unit last December in a bid to simplify and cut costs.
Read more: Travis Perkins confirms plans to demerge Wickes
But the Wickes and Toolstation owner has now opted to postpone the move indefinitely, but new boss Nick Roberts said simplification remained the right strategy.
“Given the current unprecedented level of uncertainty, we have decided to pause the sale process of the Plumbing & Heating business for the time being,” Travis Perkins said.
Shares slipped just 0.3 per cent in early trading.
The firm added that cost-cutting remains on track to hit its mid-2020 target of £20m to £30m.
Meanwhile the company expects to complete its demerger of Wickes in the second quarter of 2020.
“The plan to simplify the Group’s portfolio of businesses remains the right one, with good progress made through the quarter towards reducing cost and complexity,” chief executive Roberts, who has been in the role only since August, said.
Travis Perkins grew sales 3.8 per cent year on year in the third quarter, and 3.4 per cent on a like for like basis.
Toolstation boasted total sales growth of 21.3 per cent ver the quarter, or 15.4 per cent in like for likes, while Travis Perkins’ merchanting unit sales rose 2.6 per cent.
“The group delivered a solid performance in Q3, despite trading conditions becoming incrementally more challenging through the course of the summer as a result of the on-going market uncertainty,” Roberts added.
“Though the group maintains a cautious outlook for the near-term, full year performance remains in line with our expectations.”
Liberum called Toolstation and Wickes’ respective 15 per cent and 10 per cent revenue jumps “very impressive performances”.
“Albeit with soft comparisons, the recovery in Wickes sales is evident, particularly of the Kitchen/Bathrooms range which had been going backwards until this year,” the broker added.
Read more: UK construction activity suffers ‘devastating’ drop as Brexit kills demand
Travis Perkins’ share price sank earlier this month after competitor SIG issued a profit warning due to the UK and Germany’s weak economic outlook.
UK construction has slipped into a downturn due to political uncertainty over Brexit, while the German economy faces the risk of recession.