Travis Perkins (TPK) H1 2024 earnings summary

Executive summary

• Revenue declined 4.4% year-over-year to £2,362m, mainly due to weak demand and commodity price deflation in Merchanting.

• Adjusted operating profit fell 33% to £75m, with EPS down 47.9% to 15.9p and statutory operating profit at £38m after £32m of adjusting items.

• Overheads reduced by £19m year-over-year, supporting strong cash inflow and net debt reduction.

• Toolstation UK margin expanded by 130bps; exit from Toolstation France expected by year-end, removing a £16m loss from 2025 P&L.

• Market conditions remain weak, with subdued outlook for H2 2024 and new leadership appointed to drive transformation.

Financial highlights

• H1 2024 revenue down 4.4% year-over-year to £2.36bn; adjusted operating profit at £75m (down 33%).

• Adjusted EPS at 15.9p (down 47.9%); leverage (lease-adjusted net debt/EBITDA) at 2.7x, up from 2.1x last year.

• Interim dividend declared at 5.5p per share (down from 12.5p), reflecting 30%-40% payout policy.

• Cash conversion at 204% driven by working capital actions; net debt before leases reduced by £81m.

• Adjusting items totaled £32.2m, mainly from supply chain consolidation, restructuring, and Benchmarx closures.

Outlook and guidance

• Market conditions expected to remain challenging in H2 2024; no notable improvement in trading anticipated.

• Full-year 2024 adjusted operating profit expected around £150m, including £5-10m property profits and a £16m loss from Toolstation France.

• CapEx to remain disciplined, not exceeding £80m for the year; effective tax rate for UK profits expected at 29%.

• Gradual improvement in consumer confidence and trading conditions anticipated in 2025, supported by government policy and lower interest rates.

• Improved financial performance expected in 2025 as market conditions recover.