Travis Perkins hails 'positive' start to year as LFL sales grow 7.3%

Builders' merchant Travis Perkins hailed a "positive" start to 2019 on Wednesday despite uncertain market conditions, as it posted a 7.3% jump in group like-for-like sales.

That compared to 6.9% LFL sales growth in the fourth quarter of last year.

The company also said total sales grew 5.4% against a soft prior year comparative. The merchanting business saw LFL sales growth of 10.6%, while Toolstation saw growth of 19.1%, retail was up 10% and Wickes enjoyed LFL sales growth of 10.5%.

On the downside, LFL sales in the plumbing and heating segment dropped 4% due to the mild winter.

Chief executive John Carter said: "We have delivered strong sales growth in the first quarter of the year, which reflects both our focus on excellent customer service and the weak comparator in 2018. This performance is all the more encouraging given the impact of the on-going political uncertainty on our end markets.

"The merchanting businesses have maintained the strong growth trend from the end of 2018, and Toolstation continues to grow extremely well, driven by network expansion and existing stores maturing. Wickes posted encouraging sales growth figures in both core DIY and showroom categories, demonstrating a strong turnaround in Kitchen and Bathroom performance.

"In plumbing & heating the milder winter has impacted sales compared to 2018, but our branches and specialist online channels have continued to perform well. The work to operationally separate Plumbing and Heating is progressing to plan and is expected to be completed in Q2.

"We are making good progress on cost reduction activities and expect to meet our cost reduction targets this year. Overall expectations for the group in 2019 remain unchanged."

At 1235 BST, the shares were up 2.9% to 1,444p.

RBC Capital Markets analyst Andrew Brooke said this was an "excellent start" towards consensus FY LFL growth of 2.7%.

"We continue to believe that forecasts are at worst achievable, with the potential catalysts of a P&H disposal and Brexit clarity ahead whilst longer-term we see significant potential for a higher-growth, higher-margin business with the potential for significant shareholder returns. We continue to see risk reward in favour."

Canaccord Genuity said this was a "reassuring" update overall, with the group "clearly making meaningful structural changes" which appear to be going to plan.

Broker Peel Hunt said this was a solid statement overall and there should be limited changes to estimates, especially as the business has not referred to conditions in April or profit moves in more detail.

"The shares have risen 31% year-to-date and now stand on a price-to-earnings of 12.8x and 11.8x for 2019 and 2020 respectively with 8.5% and 9.5% free cash flow yields. Holders should be comfortable at these multiples given the trading backdrop."