Travis Perkins overcomes supply chain crisis with profits set to outpace market expectations but costs continue to rise
- Full-year profits expected to reach £340million, beating forecasts of £316m
- Travis Perkins revealed third quarter sales were up 13.3% on 2019 levels
- Shares dipped in early trading as the firm revealed the extent of cost increases
Building materials supplier Travis Perkins has overcome supply chain issues to post 13.1 per cent revenue growth in the third quarter of 2021, with full-year profits now expected to come in ‘at least’ £24million ahead of analyst expectations.
The group, which continues to be buoyed by the post-pandemic DIY boom, told investors on Thursday that third quarter sales were up 13.3 per cent on 2019 levels bringing year-to-date sales growth to 31.7 per cent.
But FTSE 250-listed Travis Perkins, which now expects full-year profits to be ‘at least’ £340million, compared to analyst estimates of £316million, warned of inflationary pressures eating away at margins.
The firm’s Toolstation demand from its core trade customer base ‘remains very robust’
The firm’s merchanting business delivered like-for-like sales growth of 15.3 per cent for the quarter, up 11.8 per cent on a two-year basis, with end market demand ‘remaining robust’.
Revenues from its Toolstation business nudged 1.4 per cent higher, brining two-year growth to 25.2 per cent, as ‘customer mix normalised following exceptional demand from DIY customers during 2020’.
However it said Toolstation demand from its core trade customer base ‘remains very robust’, with total UK sales around 45 per cent ahead of 2019 during the third quarter.
Travis Perkins noted ‘industry wide inflationary pressure’ accelerated in the third quarter with price inflation of around 11 per cent, up from 7 per cent in Q2.
With regard to supply chain issues, the group said it ‘continues to benefit from its extensive supply chain and strong supplier relationships in order to maximise product availability to customers’.
It added: ‘Despite the challenges presented, colleagues across all businesses have worked incredibly hard to ensure that disruption to customer service has been minimal.’
Earlier in the week it was revealed that inflation and supply chain disruption had also failed to derail the performance of Wicks, which was spun out of Travis Perkins in early 2021.
Travis Perkins shares fell 2.5 per cent to 1,545p in early trading, but remain up 18.8 per cent year-to-date.
Chief executive Nick Roberts said: ‘The Group has delivered a strong performance in the third quarter and is navigating well-documented supply chain and cost inflation challenges very capably.
‘End market demand remains robust and we are confident that we are in a strong position to deliver future growth.
‘The focus of the Group is to enhance our market leading propositions to win share and to provide new value-added services to our customers as the construction process evolves to improve quality, drive efficiency and reduce carbon and waste.’