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Travis Perkins unveils plans to cut 2,500 jobs

Published: 05:20 15 Jun 2020 EDT

Travis Perkins - Travis Perkins unveils plans to cut 2,500 jobs

Travis Perkins PLC (LON:TPK) has announced plans to cut 2,500 jobs, around 9% of its workforce, and close around 165 branches as part of a restructuring to maintain its competitiveness.

In a trading update, the FTSE 250 builders merchant said it had taken the actions due to what it said was a “challenging outlook” for its end markets, with the planned closures to focus on its merchant business, particularly small branches where it is difficult to maintain social distancing or where profits will be eroded by reduced volumes.

READ: Travis Perkins sales slump by two-thirds in April due to pandemic

The company said that its volumes in May were around 60% of the number from a year ago, although its weekly volume run rate was 85-90% from the year ago figure as the firm experienced “particular strength” in its Wickes core DIY ranges and its Toolstation business as both segments experienced higher like-for-like growth year-on-year.

Volumes in the company’s merchanting and plumbing & heating businesses were around 80% of the prior year. Travis Perkins said general merchanting was operating well, however plumbing & heating was “recovering more slowly” as most of the work required plumbers to visit customers homes, which had become more difficult during the coronavirus lockdown.

The firm added that while there had been a “significant recovery in trading volumes in recent weeks”, the coming UK recession was likely to have a “corresponding impact on the demand for building materials during 2020 and 2021”.

Despite the trading challenges, Travis Perkins said it had continued to “maintain a strong liquidity headroom position with a robust balance sheet” and had also agreed to relax its covenants with its banks for the test dates at the end of June and December 2020.

The firm also said due to the pandemic uncertainty it will now publish its interim results in early September.

“Whilst we have experienced improving trends more recently, we do not expect a return to pre-[coronavirus] trading conditions for some time and consequently we have had to take the very difficult decision to begin consultations on the closure of selected branches and to reduce our workforce to ensure we can protect the group as a whole”, said Travis Perkins chief executive Nick Roberts.

“The group has a robust balance sheet, strong liquidity position and I am confident that these proposed changes will enable us to trade successfully through this period of uncertainty with a cost base that better reflects the environment we are operating in", he added.

The company’s shares were 1.4% lower at 1,064p in mid-morning trading on Monday.

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