Travis Perkins announced its Q1 trading update on Friday where the group said its recorded an encouraging first quarter which reflects the group’s strategic progress and voiced its concerns regarding material inflation resulting in an uncertain outlook for 2022.
Travis Perkins reported total sales for the first quarter of 2022 were 13.6% higher than in 2021, indicating a solid start to the year for the group.
Total sales increased 17.9% in the Merchanting area, with all businesses functioning in line with expectations, owing almost two-thirds of the rise to pricing as manufacturers continued the raises which will be passed through promptly.
The queue of social and economic infrastructure development, as well as the continued need for additional homes, continue to support strong customer demand across all end markets for Travis Perkins.
SME customers’ order books are still solid, with a growing interest in energy efficiency projects says the group.
Travis Perkins’ Toolstation total sales fell 6.0% in the first quarter, with LFL sales falling 11.9%, reflecting a difficult prior-year comparator and the return of Toolstation’s customer mix to its core trade base, which continues to realise the importance and convenience of the customer proposition.
As the comparison period passes the elimination of pandemic limitations leaves management to be hopeful that business drivers will normalise in the second half of the year.
By the end of 2021, the construction supply chain had mostly normalised, and while the crisis in Ukraine and its influence on the global economy may threaten that relative stability, the group’s stock levels remain robust.
The group’s outlook for materials price inflation, which was previously projected to moderate towards the second half of the year, is now more uncertain, with pricing likely to account for a larger share of sales growth throughout the year than previously anticipated.
Overall, Travis Perkins’ cost inflation is expected to be moderate.
Despite the current uncertain financial and geopolitical environment, order books in the construction industry in the United Kingdom remain strong.
Management’s full-year projections remain unchanged, owing to Travis Perkins’ stable end markets and trade-focused business strategy.
Nick Roberts, Chief Executive Officer, Travis Perkins, commented, “The Group has had an encouraging first quarter and, although the wider economic backdrop remains uncertain, we are well placed to build on this positive start in the coming months.”
“The energy efficiency of the UK’s built environment remains a key focal point for households and politicians alike and the current cost of energy is likely to prompt further demand for improvement in both new and existing buildings. Allied to the significant pipeline of investment in the UK’s social and economic infrastructure, we remain confident in the structural drivers of demand in our end markets.”
“As the UK’s largest building materials supplier and a leading partner to the construction industry, we are uniquely placed to support the country in this drive and are working closely with all key stakeholders, including government, housebuilders, tradespeople and developers, to address these challenges.”
Travis Perkins shares dropped 1.4% to 1,249p on Friday despite the group stating that the start of 2022 was encouraging in its Q1 trading update.