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Travis Perkins’ profits fall after job cuts and branch closures

By Nagasunder in UK Business News, posted March 2, 2023

Travis Perkins cut 400 jobs and closed nearly 20 branches at the end of last year as the construction industry slowed.

The chain said "difficult decisions" to cut costs by £25 million this year needed to be made.

The firm shut 19 branches of its general merchant and Benchmarx divisions in the fourth quarter of 2022.

This led to 400 job losses across central support functions and the closure of some sites.

This week, the company announced a 20 percent drop in pre-tax profits to £245 million.

It also fears a difficult 2023 due to a combination of housebuilders slowing down projects and homeowners put off investing in their homes due to the pressure of the cost of living and a rise in borrowing costs.

Travis Perkins says this is likely to hit profits by around six percent.

Last year, the company's adjusted operating profit fell 16 percent to £295 million, falling short of the predicted £320 million, but sales remained resilient, increasing 8.9 percent.

The shortfall was attributed to restructuring costs associated with the closure of 20 smaller branches out of the group's 1,500, which finance chief Alan Williams said was part of Travis Perkin's plan to prepare for a tougher year.

He said the bright spot was in public sector projects such as hospital and school construction, as well as the social housing sector.

He said: “We’re still seeing a lot of refit projects post the pandemic throughout the UK.

He added many offices were being updated to suit more flexible working patterns.

The company predicts inflation for the building goods it sells will be around 5-8 percent this year, down from about 15 percent last year.

Williams revealed bricks were one of the worst affected products, with prices increasing by 50 percent in the last 18 months, while the cost of plasterboard increased by 30 percent.

Chief executive Nick Roberts said: “In the second half of the year we made some difficult decisions in response to the weaker trading environment and we continue to be watchful of market trends, working closely with our customers and suppliers to stay on the front foot.”

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Until the most recent downsizing, the organisation employed roughly 20,000 employees overall and had about 1,500 branches.

Source: Retail Gazette