DIY giant still 
hammered by 
weak demand

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WEAK spending by households on DIY projects continues to depress trading at building materials giant Travis Perkins, which said underlying sales so far this year remain negative as it battles tough conditions.

The group, which owns brands including City Plumbing, Keyline, Tile Giant, BSS and Wickes, said like-for-like sales were down 1.8 per cent year-on-year in the 11 months to the end of November.

That followed a 1.7 per cent decline reported for the nine months to the end of September.

Building materials firms are enduring tough markets as continued consumer uncertainty, reluctance among businesses to invest, ongoing low housebuilding rates and weak mortgage approvals result in sluggish construction output.

“In trading conditions that remain difficult, like-for-like sales trends in the group are similar to those reported in October,” said the company.

Travis Perkins was hurt in its third-quarter by downpours, tough competition and the Olympics. At the time it posted a like-for-like sales slide of 3.5 per cent in the three months to the end of September.

Only Travis Perkins’ specialist merchanting arm delivered positive underlying sales, with growth of 1.6 per cent in the 11 months so far this year, boosted by the demise of a competitor.

Underlying sales in general merchanting were down 0.4 per cent and plumbing and heating fell 1.8 per cent. Its consumer division, which spans Wickes, Tile Giant and Tool Station, saw the steepest slump with underlying sales falling 5.8 per cent so far this year as consumers hold off spending on repairs and DIY work.

Total sales at the group were up 1.6 per cent so far this year, helped by two more trading days for its merchanting and plumbing divisions compared with 2011 and the full acquisition of Toolstation in January.

“These trends mean that our outlook for the year as a whole remains unchanged from our October statement,” said the company.

“We remain on track to meet our consensus earnings per share and are on track to achieve our net debt target of approximately £450m at the year end.”

The group has 27 Travis Perkins sites in Yorkshire, four BSS locations, and Wickes has 17 sites. The group operates 16 businesses from more than 1,800 sites across the UK.

Travis Perkins is expected to post a full-year pre-tax profit of £309.5m.

Travis Perkins fared better than its rival Kingfisher, which owns the B&Q and Screwfix brands.

It recently posted a 3.8 per cent fall in underlying sales in the UK and Ireland in the 13 weeks to the end of October.

B&Q saw underlying sales fall four per cent, although it eked out 1.7 per cent more profit through “operating cost efficiencies including lower bonus provisions”.

Screwfix grew total sales 10.9 per cent to £149m. It did not provide a like-for-like figure.

The Council for Mortgage Lenders yesterday reported an improvement in home loans, with mortgage advances for house purchases rising 10.2 per cent year-on-year to 49,500 in October.

But IHS Global Insight economist Howard Archer said a “significant, sustainable turnaround in house prices is still some way off”.

Panmure Gordon analyst Andy Brown said: “A brief update from Travis Perkins confirms that in difficult markets, trading remains in-line with expectations and net debt reduction is on track. With its strong record on cost control and proven ability to grow complementary businesses we stay positive on Travis Perkins.”

He added Travis Perkins “continues to deliver best in class margins”.

Seymour Pierce analysts said: “Despite the evident weakness in UK construction and poor consumer confidence, Travis Perkins is performing reasonably well.”

john.collingridge@ypn.co.uk