Travis Perkins plc - COVID-19 update

Travis Perkins (TPK) 
Travis Perkins plc - COVID-19 update 
 
20-March-2020 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
      20 March 2020 
 
   Travis Perkins plc - COVID-19 update 
 
 The Group's trading performance in 2020 has been in line with expectations, 
      with solid trading in the Merchanting businesses and a strong start in 
 Toolstation and Wickes. Total Group sales grew by 2.4% year-to-date[1], and 
  recent trading has not yet shown a significant sales impact as a result of 
      COVID-19. 
 
However, due to the rapidly evolving situation and the dynamic UK Government 
      response to the impact of COVID-19, the Group expects the trading 
      environment to change quickly and materially in the coming weeks. In 
      response to this, the Board is taking prudent decisions in order to 
  successfully navigate this period of turmoil. These include the suspension 
      of the proposed full-year 2019 dividend and the pausing of the Wickes 
      demerger process in light of current extreme stock market volatility. 
 
      Robust financial position 
 
 The Travis Perkins Group enters the expected coming period of volatility in 
      a strong position and with a robust balance sheet. 
 
    The Group has significant liquidity headroom; at 19 March 2020 the Group 
   held GBP185m of cash on deposit, in addition to an undrawn revolving credit 
  facility (RCF) of GBP400m. The Group maintains a close relationship with its 
core lending syndicate. Overall, the Group's debt maturities are well spread 
      with no immediate refinancing required. 
 
      Mitigating actions 
 
Taking into account the current level of uncertainty, and the possibility of 
considerable disruption to the economy, the construction and RMI markets and 
to the Group's business, the Board has taken the prudent decision to suspend 
    the final dividend payment of 33.0p per ordinary share that was proposed 
      with the announcement of the full-year 2019 results on 3 March 2020. 
 
      Should the Group experience a reduction in sales volume, either from 
      enforced store closures or a wider reduction in economic and market 
 activity, plans are in place to balance the protection of profitability and 
      preservation of operating cash flow with the long-term needs of the 
 business. Actions include reducing operating costs where sensible to do so, 
    a robust assessment of all capital expenditure requirements, and careful 
  management of inventory and other working capital. The Group will make use 
      of tax relief and other Government measures as they become available. 
 
      Wickes demerger 
 
  Good progress has been made in recent months to prepare for the separation 
  of Wickes. However, given the current level of uncertainty surrounding the 
      impact of COVID-19 on the Group's end markets, as well as the extreme 
 volatility in global and UK equity markets, the Board has concluded that it 
 would be prudent to pause the Wickes demerger process so that the Board and 
      our colleagues can focus on managing the Group through the current 
      challenges. 
 
      Whilst it is impossible to know exactly when it will be appropriate to 
 re-start the demerger process, the intent to demerge remains unchanged, and 
  we believe that we are in an advanced state of preparedness and would hope 
      to be able to move forward swiftly when it is appropriate to do so. 
 
      Outlook 
 
     The current level of uncertainty means it is too early for the Group to 
provide an accurate assessment on trading and the Group withdraws all market 
guidance in the near-term. The Group will provide further updates when there 
    is greater clarity on the impact of COVID-19 on the trading environment. 
 
      Nick Roberts, CEO, commented: 
 
"Our highest priority is the health and safety of our colleagues, customers, 
  suppliers and all other stakeholders, and we have taken decisive action to 
mitigate the risks we are facing as a business, and implementing contingency 
      plans across the Group. We are absolutely committed to fulfilling the 
      essential role we play in the UK construction industry supply chain in 
  keeping the UK dry, warm, maintained and operational; providing materials, 
      working capital funding and support for our trade customers, large and 
      small. 
 
   "Whilst there is unprecedented uncertainty on how the virus outbreak will 
 directly impact our markets and our businesses, we enter this period from a 
position of strength and security, with a strong balance sheet and access to 
      significant committed liquidity." 
 
      Enquiries: 
 
Travis Perkins                     Powerscourt 
Graeme Barnes                      Justin Griffiths / James White 
[phone]                [phone] 
[e-mail]  [e-mail] 
 
=--------------------------------------------------------------------------- 
 
[1] Total sales growth to 18 March 2020, excluding Toolstation Europe and 
PF&P wholesale 
 
ISIN:          GB0007739609 
Category Code: MSCM 
TIDM:          TPK 
LEI Code:      2138001I27OUBAF22K83 
Sequence No.:  53575 
EQS News ID:   1002527 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

March 20, 2020 03:00 ET (07:00 GMT)