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Travis Perkins remains on track, though market conditions 'challenging'
Travis Perkins issued its first quarter trading update on Friday, reporting a "solid start" to 2018 given what it described as challenging market conditions.
The FTSE 250 building supplies giant said it saw like-for-like sales growth of 3.0% for the three months to 31 March, and total sales growth of 2.4%.
It said it saw "strong" performance in its plumbing and heating division, with like-for-like sales growth of 19.7%.
Underlying trading in general merchanting and contracts remained "resilient" in light of weather impacts, with the board saying its overall expectations for 2018 remained unchanged, with cost actions to drive cost efficiency and mitigate difficult market conditions.
"We delivered solid like-for-like sales growth in the first quarter, with volumes across the group broadly flat and pricing initiatives to recover on-going commodity driven price inflation," said group chief executive John Carter.
"The turnaround in the plumbing and heating division continues to build momentum as our improvements take effect."
Carter said adverse weather conditions impacted sales across the group in February and March, but its overall expectations for 2018 remained unchanged and were supported by actions to reduce costs.
"Whilst the mixed trading conditions in our markets are expected to continue in the near-term, we remain confident in the longer term outlook for the building materials market, with opportunities to grow and outperform through the investments we are making to develop or extend our strong customer propositions."
The Travis Perkins board said weather conditions caused "considerable disruption" across the UK in February and March, and adversely affected sales across the group.
Heavyside material sales in particular were impacted across the general merchanting and contracts divisions, as well as outdoor product categories in Wickes, with an overall group sales impact estimated at between 1.5% and 2.0% of like-for-like sales growth.
That was partially offset by a modest boost to plumbing and heating sales.
Excluding impacts from the adverse weather, general merchanting like-for-like sales were positive, in line with expectations, and reflected "good recovery" of cost price inflation, the board said.
The contracts division continued to perform well against strong growth comparators from 2017.
In the consumer division, Wickes suffered from a declining UK DIY market reflecting weak consumer sentiment, although kitchen and bathroom showroom orders recovered relative to the fourth quarter of 2017, and were broadly in line with last year's first quarter figures.
The transformation programme in the plumbing and heating division continued at pace, with the benefits of improvements to the customer proposition delivering good growth in all channels - through the branch network, online and through the wholesale business.
In the merchanting divisions, there was one fewer trading day in the first quarter of 2018 than in 2017, while in the consumer division, the period ended on 31 March, with two days of the Easter trading weekend included in the result.
Travis Perkins said those two days contributed an additional 1.4 percentage points to like-for-like sales growth in the consumer division in the quarter.
Recent market lead indicators such as mortgage approvals, housing transactions, house prices and consumer confidence remained mixed, the board noted, with continued pressure in consumer-facing businesses across the UK.
Travis Perkins said it was taking actions to reduce costs and improve efficiency, and ensuring that it retained the flexibility to take further actions if necessary.
Assuming no further deterioration in market conditions, at the current early stage of the year the group was on track to meet its expectations for 2018.