PTS – a Travis Perkins trademark
Travis Perkins’ sales in 2016 increased 4.6% through December 31, 2016, reaching £ 6,217 million. Pre-tax profit decreased 67% to £ 73 million (2015: £ 224 million) mainly due to an impairment loss of £ 235 million on goodwill and other intangible and tangible assets at City Plumbing, PTS, F&P, Bathrooms .com, Solfex and Tile Giant.
The plumbing and heating market (which contributed £ 1,359 million to Travis Perkins’ revenues in 2016) has remained flat in recent years, Travis Perkins said, with declines in the public housing sector driven by growth in new home builds and more modest growth in repair and maintenance work.
“Both the contract and local plumbing markets are increasingly competitive, with traditional plumbing distribution channels under pressure from significant expansion of online fixed-price multichannel operators and strong local and regional independents,” said Travis Perkins. “As a result of these market changes, conditions may deteriorate in 2017.”
The company’s plumbing and heating division has already been reorganized in recent years and further restructuring is imminent.
The public housing boiler and heater replacement market remains challenging as traditional traders aggressively compete for prices for stores that affect PTS. The PTS management team developed a lower-cost branch operating model during the year and tested the model in a small number of locations.
CEO John Carter said, “2016 was another solid year for the group with continued strong performances in the Consumer, Contracts and General Merchanting divisions, which together contributed 90% of the group’s adjusted operating profit. These business areas continued to benefit from the investments made in the branch network and customer offers over the past three years, which forms a strong basis for future growth.
“It was a much more difficult year for the Plumbing & Heating division, driven by structural challenges for traditional retail companies in this segment. While the network restructuring in 2014 and 2015 resulted in a more focused branch network, more work is needed and over the next six months we will be exploring all avenues to increase returns. We can improve our offer for our customers, our availability, our online presence and our range of services.
“The UK’s macroeconomic outlook is mixed. The sharp depreciation of the pound sterling since June 2016 has put cost pressures on imported goods and materials, and expectations for secondary housing market transactions and the growth of the RMI market have weakened. We have a proven track record in managing our cost base and in October 2016 took decisive action and announced a restructuring program to close underperforming stores and improve supply chain efficiency. We are entering 2017 with a strong balance sheet and will continue to invest selectively in our leading businesses in order to further strengthen our competitive advantages, which will enable us to further outperform in the medium term and increase shareholder value. “
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