Travis Perkins ‘too internally focused’, says boss after profit warning

The new boss of Travis Perkins said the builders’ merchant had “become distracted and overly internally focused” as the company issued its second profit warning in three months.
In a trading update for the three months to the end of September, the company said it expected full-year operating profit to be £135 million, compared with consensus estimates of £153 million.
Investors took fright sending the shares down 42p, or 4.6 per cent, to close at 880p.
Pete Redfern, the former boss of the housebuilder Taylor Wimpey, who took over as chief executive of Travis Perkins from Nick Roberts last month, said that the company needed to “get back to a focus on operational execution” after it allowed itself to “become distracted and overly internally focused”.
In May Jasmine Whitbread stood down as chair of the company after a revolt from shareholders, almost a quarter of whom voted against her re-election at the annual general meeting.
Roberts had announced his departure just six week before that, having seen a sharp fall in profits during his five-year tenure.
A number of other key staff have also left the company this year, including Dean Pinner, the managing director of Keyline, the group’s supplier of construction materials for infrastructure projects.
“There’s been a lot of change,” Redfern said. “Our teams are perfectly capable of delivering a great result even in a pretty tough market and I don’t feel like they’ve had the best chance to do so but we can turn that around and there are clear things that we can and should do to give them the tools to do the job.”
Sales fell by 5.7 per cent year-on-year, driven by the company’s merchanting segment where revenue was 8.2 per cent lower like-for-like; its general merchant suffered a loss of market share over the summer.
The company said that both volume and margin in the general merchant segment had “underperformed expectations”, with volume continuing to decline despite recent changes to optimise pricing. Redfern added that Travis Perkins should be doing better in its merchanting division. “We should be able to beat the market and not go slightly backwards from the market,” he said.
The company noted that its key end markets were stabilising, and that it saw “some very early signs of recovery”. It expected positive but slow growth in these underlying markets over the next twelve months.
“It’s been a pretty tough quarter,” Redfern added. “The election helped a bit in terms of sentiment but people are waiting to find out what that means. They are waiting for the budget and to what extent there will be infrastructure spending. Things haven’t got worse because of that but you haven’t seen any meaningful pickup.”
The company’s trade outlet Toolstation had a strong performance. Sales rose by 2.9 per cent in the division and were up 2.1 per cent in the year to date against a 6.3 per cent fall in the merchanting division.
It added that Toolstation France remained on track to be fully closed by the end of the financial year, with eight branches being sold to the French tool retailer Quincaillerie Angles and the remaining 43, alongside the transactional website, having ceased trading.