December 4, 2018 / 7:19 AM / 8 days ago

Travis Perkins to sell plumbing and heating division

FILE PHOTO: A worker walks past bricks at the Vauxhall depot of building material supplier Travis Perkins in London, Britain, October 25, 2013. REUTERS/Neil Hall/File Photo

LONDON (Reuters) - Travis Perkins (TPK.L), Britain’s largest building materials group, plans to sell its plumbing and heating division, and said it could divest its Wickes home improvement chain in the future.

The group, which operates over 20 brands, said in a strategy update on Tuesday that it would simplify its structure and streamline its cost base, concentrate more on its trade businesses, and improve the performance of consumer-focused Wickes.

It said it would review options for maximising the value of Wickes in the medium term, meaning a sale could be on the cards, as it focuses on higher returning trade units.

It said the disposal of the plumbing and heating division would allow more focused management attention and capital deployment on the trade business.

Ahead of its capital markets day Travis Perkins said its overall performance was consistent with expectations at the time of its third-quarter trading update in October.

The group said the long-term growth drivers of the business were robust, with a continued shortage of housing in Britain and underinvestment in the maintenance and improvement of the existing, ageing, housing stock. However, in the shorter term, market conditions remained uncertain, impacting secondary housing market transactions and consumer confidence.

Travis Perkins, whose shares have fallen 30 percent so far this year, is targeting further annualised cost savings of 20-30 million pounds, delivered over the next 18 months.

Prior to Tuesday’s update analysts were on average forecasting for the 2018 year earnings before interest, tax and amortisation (EBITA) of 362.5 million pounds, down from 380 million pounds in 2017.

Reporting by James Davey, Editing by Paul Sandle and Sarah Young

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