Travis Perkins shareholders to benefit from sale of plumbing and heating arm
Travis Perkins to reward shareholders after announcing £ 325 million sale of plumbing and heating business
- Private equity house HIG Capital buys the plumbing and heating arm
- Travis Perkins recently completed the spin-off from DIY product company Wickes
- The company’s first quarter results showed comparable store sales growth of 17.4%
Building materials company Travis Perkins has stated that its shareholders are eligible for a payout after it revealed that its plumbing and heating business is being sold.
The FTSE 250 group is selling the division for £ 325 million to a subsidiary of Miami-based private equity firm HIG Capital and expects to close the transaction sometime in the next three months.
It is part of the company’s strategy to streamline its portfolio, which it set out in late 2018 and included plans to deliver £ 20m to £ 30m in cost savings and strengthen its overall trading arm.
Offload: Travis Perkins sells its plumbing and heating distribution arm for £ 325 million
Also included in that roadmap was the goal to improve the performance of Wickes, the Northampton-based home improvement retailer Travis Perkins broke down last month.
The company said its “strong balance sheet and robust liquidity” allowed it to reward shareholders through a mix of a dividend of 35 pence per share and, depending on market conditions, a share buyback scheme.
Chief Executive Nick Roberts said: ‘There has been a significant amount of work in recent years to improve the P&H business, and I am confident the company will continue to make excellent progress under the ownership of HIG’
He added: ‘Following the Wickes split in April 2021, the group has now implemented the planned actions to simplify its portfolio, and thanks to the group’s strong balance sheet, we can return the net proceeds to shareholders.
“Looking ahead, the group has a bright future as the UK’s leading supplier of construction products and we look forward to setting out our plans later in the summer to continue to drive growth.
Due to the essential classification of the construction industry and increased demand for home improvement among stuck consumers, Travis Perkins has benefited from a strong rebound in sales after a dip in the early stages of the lockdown.
Divorce: Travis Perkins’ sale of its plumbing and heating distribution arm comes a month after Wickes, its Northampton-based home improvement retailer, split up.
In the first half of 2020, total sales fell by a fifth as builders across the UK took down tools and national lockdowns forced the group to close branches.
Last summer, it announced that about 2,500 jobs and 165 stores would be cut, as Roberts stated that the company did not expect pre-Covid trade levels to return “ for some time. ”
However, business picked up steam and after a rebound in construction activity, Travis Perkins said it would repay £ 50 million in corporate interest cuts and leave money it had received from the government.
The most recent results for the three months to April 28 showed like-for-like sales growth of 17.4 percent, with sales at the Toolstation retailer up 42 percent and trading operations growing sales by 15.5 percent.
Home Improvement: The UK has been going through a DIY boom since the start of the pandemic
Meanwhile, sales were up 11.8 percent over a two-year period, with Toolstation’s revenues up two-thirds as the company experienced strong demand for repair maintenance and improvement activities.
By contrast, B&Q owner Kingfisher has outperformed Travis Perkins in relative terms.
Yesterday, it revealed that first-quarter like-for-like sales rose 23 percent to £ 3.4 billion, with French divisions Brico Depot and Castorama all doubling their sales numbers.
However, the company warned that supply chain issues such as raw material and shipping costs would continue to affect them for at least another six months.
Shares in Travis Perkins closed 0.56 percent higher at £ 16.25 on Friday.