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(Sharecast News) - Shares in Travis Perkins dropped sharply on Tuesday after the building materials group said it barely broke even in 2024 on the back of falling volumes and prices and an underperforming merchanting business, with the bottom line weighed down further by 139m in impairment charges.
Travis Perkins, which saw its chief executive Peter Redfern step down last month due to ill health, reported revenues fell 4.7% at 4.61bn in 2024, due to a weak performance in the merchanting division, which accounts for more than 80% of the overall business.
Merchanting sales were 6.2% lower at 3.79bn as a result of price deflation and declining volumes, arising from the "depressed levels of UK construction activity and an intensely competitive backdrop", the company said.
Adjusted operating profits were down 23.2% at 152m. However, when excluding adjusting items - which included impairments in certain merchanting branches and restructuring actions, as well as write-downs in its stairs, floors and doors company Staircraft - operating profits totalled just 2m, down from 161m in 2023.
"If there was any doubt about the size of the task involved in fixing Travis Perkins then it will have vanished in the wake of an ugly set of results from the builders' merchant," said Russ Mould, investment director at AJ Bell.
Looking ahead, Travis Perkins chair Pete Redfern said that, with more resources re-deployed into customer-facing roles, the company was now "better placed to benefit from returning demand" in the UK construction market - whenever that recovery happens.
"This will be supported by disciplined capital allocation, focused on upgrading and protecting our core competitive advantages, and a clear customer-focused strategy owned by the leaders of the business. I am confident that this approach will provide attractive returns for shareholders over the medium-term."
The company paid a final dividend of 9p, up from 5.5p the year before, though the full-year payout of 14.5p was still 19.4% lower than 2023.
Shares were down nearly 7% at 512.5p by 1100 GMT, hitting their lowest since 2009.