Travis Perkins plc - COVID-19 update (1002527)
March 20 2020 - 2:00AM
UK Regulatory
Travis Perkins (TPK)
Travis Perkins plc - COVID-19 update
20-March-2020 / 07:00 GMT/BST
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20 March 2020
Travis Perkins plc - COVID-19 update
The Group's trading performance in 2020 has been in line with expectations,
with solid trading in the Merchanting businesses and a strong start in
Toolstation and Wickes. Total Group sales grew by 2.4% year-to-date[1], and
recent trading has not yet shown a significant sales impact as a result of
COVID-19.
However, due to the rapidly evolving situation and the dynamic UK Government
response to the impact of COVID-19, the Group expects the trading
environment to change quickly and materially in the coming weeks. In
response to this, the Board is taking prudent decisions in order to
successfully navigate this period of turmoil. These include the suspension
of the proposed full-year 2019 dividend and the pausing of the Wickes
demerger process in light of current extreme stock market volatility.
Robust financial position
The Travis Perkins Group enters the expected coming period of volatility in
a strong position and with a robust balance sheet.
The Group has significant liquidity headroom; at 19 March 2020 the Group
held GBP185m of cash on deposit, in addition to an undrawn revolving credit
facility (RCF) of GBP400m. The Group maintains a close relationship with its
core lending syndicate. Overall, the Group's debt maturities are well spread
with no immediate refinancing required.
Mitigating actions
Taking into account the current level of uncertainty, and the possibility of
considerable disruption to the economy, the construction and RMI markets and
to the Group's business, the Board has taken the prudent decision to suspend
the final dividend payment of 33.0p per ordinary share that was proposed
with the announcement of the full-year 2019 results on 3 March 2020.
Should the Group experience a reduction in sales volume, either from
enforced store closures or a wider reduction in economic and market
activity, plans are in place to balance the protection of profitability and
preservation of operating cash flow with the long-term needs of the
business. Actions include reducing operating costs where sensible to do so,
a robust assessment of all capital expenditure requirements, and careful
management of inventory and other working capital. The Group will make use
of tax relief and other Government measures as they become available.
Wickes demerger
Good progress has been made in recent months to prepare for the separation
of Wickes. However, given the current level of uncertainty surrounding the
impact of COVID-19 on the Group's end markets, as well as the extreme
volatility in global and UK equity markets, the Board has concluded that it
would be prudent to pause the Wickes demerger process so that the Board and
our colleagues can focus on managing the Group through the current
challenges.
Whilst it is impossible to know exactly when it will be appropriate to
re-start the demerger process, the intent to demerge remains unchanged, and
we believe that we are in an advanced state of preparedness and would hope
to be able to move forward swiftly when it is appropriate to do so.
Outlook
The current level of uncertainty means it is too early for the Group to
provide an accurate assessment on trading and the Group withdraws all market
guidance in the near-term. The Group will provide further updates when there
is greater clarity on the impact of COVID-19 on the trading environment.
Nick Roberts, CEO, commented:
"Our highest priority is the health and safety of our colleagues, customers,
suppliers and all other stakeholders, and we have taken decisive action to
mitigate the risks we are facing as a business, and implementing contingency
plans across the Group. We are absolutely committed to fulfilling the
essential role we play in the UK construction industry supply chain in
keeping the UK dry, warm, maintained and operational; providing materials,
working capital funding and support for our trade customers, large and
small.
"Whilst there is unprecedented uncertainty on how the virus outbreak will
directly impact our markets and our businesses, we enter this period from a
position of strength and security, with a strong balance sheet and access to
significant committed liquidity."
Enquiries:
Travis Perkins Powerscourt
Graeme Barnes Justin Griffiths / James White
+44 (0) 7469 401819 +44 (0) 207 2501446
graeme.barnes@travisperkins.co.uk travisperkins@powerscourt-group.com
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[1] Total sales growth to 18 March 2020, excluding Toolstation Europe and
PF&P wholesale
ISIN: GB0007739609
Category Code: MSCM
TIDM: TPK
LEI Code: 2138001I27OUBAF22K83
Sequence No.: 53575
EQS News ID: 1002527
End of Announcement EQS News Service
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