Travis Perkins (TP) has announced a £300m rights issue to shore up its balance sheet.
The merchant also reported that group like-for-like sales were down 14.4% during the first four months of 2009 but that the market was showing “signs of stabilisation”.
In its interim statement, TP said the rights issue, involving 85.9 million new shares, would reduce the group’s net debt, substantially increase financial headroom and improve its trading position through the recession.
Merchanting revenue declined 19% on a like-for-like basis during the period, with March and April reflecting a continuation of the decline.
TP said it had performed ahead of expectations, had chosen not to pursue low margin sales and had been successful in passing on the majority of cost increases.
Subsidiary Wickes had a successful Easter trading period, reflected in a 2.9% sales improvement for March and April compared with a year ago.
Kitchen and bathroom products performed strongly (like-for-like sales up 12.5%), helped by television advertising and heavy discounting, while lie-for-like sales of Wickes’ core products declined 6.5%.
“The board expects the markets in which the group operates to continue to weaken until at least the third quarter of 2009,” TP said.
“The board believes recent lead indicators relating to the housing market, such as mortgage approvals, housing transactions, house prices, consumer confidence and construction orders generally show signs of stabilisation.”
