* 2016 pretax profit 73 mln stg, down 67 pct
* Raft of exceptional items booked in accounts
* Core earnings meet analysts' expectations
* Says trading outlook has worsened
* Shares fall up to 8 pct
(Adds details, CEO and analyst comments, share price)
By James Davey
LONDON, March 2 Travis Perkins,
Britain's biggest supplier of building materials, warned of
rising costs and pressure on discretionary spending as it
delivered a 67 percent slump in 2016 profit, sending its shares
down 8 percent.
The group's customers include local authorities, big
building firms, traders such as plumbers and kitchen fitters and
regular consumers, with its fortunes closely tied to housing
transactions and consumer confidence.
"The sharp decline in the value of sterling since June 2016
has created cost pressures on imported goods and materials, and
the expectations for secondary housing market transactions and
growth in the repair, maintenance and improvement market have
weakened," Chief Executive John Carter said on Thursday.
The group, which has over 20 businesses including Travis
Perkins, Wickes, BSS, Toolstation and Tile Giant, mostly blamed
its poorly performing plumbing and heating business for a raft
of exceptional charges that pulled down profits.
Its shares fell 121 pence to 1,444 pence by 1042 GMT,
valuing the firm at 3.64 billion pounds ($4.5 billion) and
taking losses for the year to 20 percent.
Carter said pressure on discretionary spending from rising
inflation could dent secondary housing transactions in the
second half of 2017.
"Any significant reduction in consumer confidence may have a
more pronounced impact on big-ticket purchases such as kitchens
and bathrooms which make up around 10 percent of the group's
sales," he said.
Travis Perkins booked an exceptional non-cash impairment
charge of 235 million pounds ($289 million) against goodwill and
intangible and tangible assets.
An exceptional charge of 57 million pounds was also taken to
cover the cost of closing underperforming branches and a
restructuring of its supply chain and central operations. Those
changes were announced in October when Travis Perkins also
warned of the hit to profits and kicked off a review of the
plumbing and heating business.
The charges meant the group's pretax profit fell to 73
million pounds in the year to Dec. 31 2016.
"Further work is required and over the next six months we
will be exploring all routes to enhance returns," Carter said of
the plumbing and heating division which contributes about 10
percent of group profit.
Adjusted operating profit was 409 million pounds, broadly in
line with analysts' expectations but down from 413 million
pounds in 2015. Revenue increased 4.6 percent to 6.22 billion
"While current consensus expectations are not too stretched
for 2017 with flattish profits expected, we would not be
surprised to see 2017 consensus move lower, probably down by 4-6
percent," said analysts at Canaccord Genuity, which has a "buy"
rating on the stock.
($1 = 0.8145 pounds)
($1 = 0.8146 pounds)
(Editing by Alistair Smout and Elaine Hardcastle)