Hire stands out at TP
1 August 2023
Tool hire is a bright spot in the half-year results released this morning by builders’ merchant Travis Perkins which otherwise disappointed due to the economic backdrop of high interest rates and inflation affecting demand.
Hire performed strongly with revenue growth of 6 per cent in the first half of the year to 30 June and is reported to currently be 34 per cent ahead of 2019 levels.
Since 2020, the TP group has invested in 17 new, expanded or relocated branches which are said to be delivering a revenue and profit performance ahead of investment appraisal targets and significantly ahead of the 2018-19 cohort.
TP says that six more sites are due to open in the second half of the year including Tamworth, Cambridge and Epsom.
Overall, however, the group saw revenues down by 2.5 per cent to £2,472 million and adjusted profit of £112 million, down by 31 per cent, driven primarily by the impact of significantly lower volumes in the new-build housing and private domestic RMI (repair, maintainence and improvement) markets on the merchanting business.
Nick Roberts, Chief Executive Officer, said market conditions had been challenging but that whilst near-term trading is expected to remain difficult, TP believes that opportunities remain surrounding the requirement to decarbonise the UK’s built environment and in addressing the shortage of both private and social housing.
TP reported that the private domestic RMI market, which represents approximately 35 per cent of merchanting revenue, remained challenging throughout the half year with notably fewer secondary housing transactions and homeowners’ budgets squeezed by inflation and rising mortgage costs.
Similarly, the private domestic new-build market, which accounts for around 19 per cent of merchanting revenue, saw “substantial” volume decline as the impact of rapidly rising mortgage rates quickly reduced new housing starts. This was more pronounced amongst the national housebuilders, with regional housebuilders remaining more active.
● Particularly noteworthy is how TP has supported its personnel at a time of economic challenge. The group made a ‘cost of living’ payment in January 2023, at a cost of £8 million, to more than 17,000 colleagues representing approximately 95 per cent of the workforce. And in April the business awarded a pay rise of around 6 per cent on average, with those on lower incomes receiving a larger award, balanced by a lower payment for senior executives.
