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A Strategic Report on Travis Perkins

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1. Introduction

2. Strategic Analysis

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2.1 Broad environment

2.1.1 Political

2.1.2 Economic

2.1.3 Social

2.1.4 Technological

2.1.5 Environmental

2.1.6 Legal

2.2 Industry

2.2.1 Threat of new entrants

2.2.2 Menace of replacements

2.2.3 Bargaining power of purchasers

2.2.4 Bargaining power of providers

2.2.5 Competitive Competition

2.3 Company scheme

3. Fiscal Statement Analysis

3.1 Income Statement Analysis

3.2 Balance Sheet Analysis

3.3 Cash Flow Statement Analysis

3.4 Other Ratios Analysis

4. Stock Market Analysis

4.1 Share monetary value public presentation analysis

4.2 Stock market indexs analysis

4.2.1 Discussion of EPS and P/E

4.2.2 Discussion of dividend policy and D/Y

5. Drumhead and Decision

5.1 Drumhead by SWOT analysis

5.2 Recommendations for investors

6. Bibliography

7. Appendixs

7.1 Strategy of Travis perkins

1. Introduction

Travis Perkins is a taking Public Limited Company in the builders’ merchandiser and place betterment markets across the UK and Ireland ( Annual Report, 2013 ) . The Group became one of the FTSE 100 companies for the first clip in June 2013 ( Annual Report, 2013 ) .

The conceiver of Travis Perkins, which can be traced back to 1797, is the Benjamin Ingram company trading as joiners and carpenters ( Travis Perkins, 2014 ) .

During the last 200 old ages, Travis Perkins became a Public Limited Company though amalgamations and acquisitions in 1988 ( Travis Perkins, 2014 ) . The headquarter is in Northampton, the United Kingdom using 21,937 people as of December 31, 2013 ( Travis Perkins, 2014 ) .

Now The Group is the UK’s largest merchandise provider in the edifice and building market runing 17 concerns with 14 trade names and over 1,900 subdivisions ( Annual Report, 2013 ) . Travis Perkins offers a broad scope of merchandises and services such as general edifice stuffs, kitchens and joinery merchandises, edifice and cosmetic stuffs and plumbing and warming merchandises ( Travis Perkins, 2014 ) .

Over the last few old ages, Travis Perkins has acquired several companies to widen its concern and prehend the chance to heighten its growing as a consequence of the lifting economic recovery ( Annual Report, 2013 ) . The scheme aims of the Group has late centralized on the consolidation of the stockholder value. Therefore, Travis Perkins realigned the divisional construction into four sections General Merchanting, Specialist Merchanting, Consumer and Plumbing and Heating ( Annual Report, 2013 ) . At the interim, Travis Perkins has a large motion in the Board of Directors as the Chief Financial Officer, non-executive board managers and the Chief Executive are all freshly appointed ( Annual Report, 2013 ) .

This study will measure the public presentation of Travis Perkins from strategic waies, fiscal statement public presentation and stock market public presentation three facets.

2. Strategic Analysis

The strategic way of a company should be based on the environment it operates. Therefore, the strategic analysis is divided into three parts from macro environment, peculiar industry and the schemes of the company.

2.1 Broad environment

This portion will analyse the macro-environmental forces that may impact Travis Perkins utilizing PESTEL analysis. It is highly necessary for companies to place the external and wide environment in which they are runing to do alterations to their long term schemes to set with the external environment alterations.

2.1.1 Political

The Government-funded Construction Pipeline, released in November 2012, has encouraged the industry where Travis Perkins operates ( Key Note, 2013 ) . However, it will take to the decrease of authorities outgo on building ( Key Note, 2013 ) . Furthermore, the authorities asceticism measures curtail the public outgos on building for the few undermentioned old ages ( Key Note, 2013 ) . As a consequence, the lessening of building end product will hold inauspicious effects on the builders’ merchandiser and place betterment markets. Travis perkins necessitate to be cognizant of it as a menace to the concern.

Due to the down activity across the building industry, the UK authorities took action to re-boost the lodging stock and increase the minutess in the lodging market by bring forthing several enterprises such as the Help-to-buy strategy in 2013 ( Key Note, 2013 ) . The support pledged by the authorities has helped renters to recognition borrowing taking at increasing the demand for new lodging and secondary lodging minutess ( Annual study, 2013 ) . As the provider to the building industry, Travis Perkins decidedly gained gross revenues through the supply of the edifice stuffs to the building industry or the increasing demand of the consumer merchandises ( Key Note, 2013 ) .

2.1.2 Economic

During the last several old ages, the recession in UK has been mostly affected by the planetary fiscal crisis in 2008. The inauspicious economic clime decidedly affected the builders’ merchandiser and place betterment markets and building industry. ‘Although growing has been recorded following the UK’s issue from recession, growing in the UK economic system remained down in 2012 —largely due to continued fiscal turbulency across Europe — forcing building end product back into negative growth’ ( Key Note, 2013 ) .The worsening in Gross Domestic Product ( GDP ) in UK demonstrates a bead of assurance towards corporate sectors ( Key Note, 2013 ) . Thus the market of builders’ merchandiser and place betterment will be affected adversely due to the diminishing capital invested in building industry ( Key Note, 2013 ) .

The high rising prices rate and unemployment rate both push the force per unit areas on concerns and do it far more dearly-won to buy lodging ( Key Note, 2013 ) .

However, Travis Perkins has been through a little recovery from the UK economic system in 2013 ( Annual study, 2013 ) .

The lifting energy costs has increased the costs in builders’ merchandiser and place betterment markets in late old ages ( Key Note, 2013 ) . The cost control should be considered by the Travis Perkins.

2.1.3 Social

The changing in customers’ purchasing behavior has been more and more diversified ( Annual study, 2013 ) . The transparence of monetary value is extremely demanded by end-users ( Annual study, 2013 ) . The fixed monetary value is more valued and the demand of better service and monetary value ( Annual study, 2013 ) . Travis Perkins faces several challenges to alter its pricing theoretical accounts to derive clients trueness.

Chart 1 Changes in purchasing behavior ( Annual study, 2013 )

Household disposable income has increased but still non plenty to excite consumers to put on new edifice merchandises ( Key Note, 2013 ) . Therefore, Travis Perkins needs a long clip to retrieve from the fiscal crisis since the market will react a clip slowdown as a tendency ( Key Note, 2013 ) .

With a steady growing in UK resident population, it shows assuring mentality of the building industry and its providers in which the market Travis Perkins operates is a turning position in the long term position ( Key Note, 2013 ) .

2.1.4 Technological

The demand for on-line incursion is higher and higher in the hereafter harmonizing to the industry prognosiss of the DIY and edifice merchandises markets ( Annual study, 2013 ) .

Chart 2 UK edifice merchandises online market ( Annual study, 2013 )

Chart 3 UK DIY and gardening on-line incursion ( Annual study, 2013 )

‘In recent old ages, there has been an rush in the usage of prefabricated constructions and modular edifice techniques’ ( Key Note, 2013 ) . These techniques can do a large alteration to the demand for new and proper stuffs and constituents ( Key Note, 2013 ) .Travis Perkins can see the cooperation with the top and bottom line concerns in the builders’ merchandiser and place betterment markets.

2.1.5 Environmental

The sustainability patterns have made it a mandatory issue to minimise the harm to the environment ( Key Note, 2013 ) . The 2008 Climate Change Act besides established a demand to the decrease of nursery gas ( Key Note, 2013 ) . ‘In the building industry, legion enterprises — such as Zero Carbon Homes and the Government’s flagship environmental enterprise the Green Deal — have been implemented in order to promote consumption of energy-efficient betterments in bing edifices and to cut down emanations from new builds’ ( Key Note, 2013 ) . Thus Travis Perkins should be concerned to all these issues which will increase the demand for fix, care and betterment work and certain types of emerging stuffs ( Key Note, 2013 ) .

2.1.6 Legal

The Building Regulations of building proficient criterions need to be concerned and Travis Perkins can prehend the chances to research energy efficient and sustainable edifice stuffs to do an advantage among rivals ( Key Note, 2013 ) .

The EU Timber Regulation ( EUTR ) has come into force in March 2013. The ordinances prohibit the operators to bring forth lumber from illicitly harvested lumber ( Key Note, 2013 ) . Although the ordinances may deteriorate some of the lumber and joinery concern. In world, the UK market has reached the demands of the ordinance which ‘will serve to make a more competitory European market, cut downing any advantage companies may derive from the usage of illegal lumber through proportionate and dissuasive penalties’ ( Key Note, 2013 ) .

2.2 Industry

The builders’ merchandiser and place betterment markets experienced significantly fluctuations over the last few old ages due to the UK economic recession and uncertainness in building industry ( Key Note, 2013 ) .

UK providers of edifice stuffs besides have extended their concerns across legion abroad markets, particularly in Europe ( Key Note, 2013 ) .

‘The entire UK building and place betterment stuffs market is deserving about i??64bn’ ( Annual Report, 2013 ) . The addressable trade market of Travis Perkins is i??33bn as the largest in the UK ( Annual Report, 2013 ) .

Chart 4 Building stuffs market ( Annual Report, 2013 ) .

The building industry and fix, care and betterment sector in UK has a important demand for a broad scope of edifice stuffs, constituents and merchandises ( Key Note, 2013 ) .Builders’ merchandiser and place betterment markets chiefly rely on the building industry and do-it-yourself ( DIY ) market every bit good ( Key Note, 2013 ) .

In order to measure the forces which determine the industry fight, the followers will be analyzed by Porter’s Five Forces Model.

2.2.1 Threat of new entrants

The menace of new entrants into the industry is low. Since there is unsubstantial chance of outgrowth of new competition for Travis Perkins. Significant sum of capital investing and expertness are required to pull off as a UK countrywide builder merchandiser in the mature market ( Annual Report, 2013 ) . The multi-channel capablenesss of supply and distribution and economic systems of graduated table are besides the potencies to come in into the market ( Annual Report, 2013 ) .

2.2.2 Menace of replacements

The menace of replacement merchandises and services is low as the demand for edifice stuffs and constituents offered by Travis Perkins is non easy substituted by other merchandisers since it enables clients to entree a broad scope of constructing material merchandise classs ( Annual Report, 2013 ) . Furthermore, a assortment of ain trade name merchandises are available as the addendum of the branded goods ( Annual Report, 2013 ) .

2.2.3 Bargaining power of purchasers

The bargaining power of Travis Perkins purchasers is strong, as the competition is ferocious and there is a broad pick of providers of edifice stuffs offered by planetary merchandisers, every bit good as, little local manufacturers ( Annual Report, 2013 ) . The little private purchasers like terminal users have no force per unit area on Travis Perkins ( Annual Report, 2013 ) . Large retail merchants, building merchandisers and public sector purchasing groups have dickering power because they may take makers straight ( Annual Report, 2013 ) .

2.2.4 Bargaining power of providers

Suppliers of Travis Perkins possess a significant bargaining power as the makers may administer the merchandises straight with the terminal users ( Annual Report, 2013 ) . The shift costs are truly high and the integrating frontward by the industry may supply a higher monetary values of the merchandises. The Group relies on abroad mills more and more to spread out its concern to cut down the trust on certain providers ( Annual Report, 2013 ) . The Group has invested capitals to its ain trade name merchandise by bring forthing direct sourcing capableness advantages ( Annual Report, 2013 ) .

2.2.5 Competitive Competition

A great many little graduated table companies make up the UK builders’ merchandisers market offering a assortment of merchandises and services to the countrywide markets ( Annual Report, 2013 ) . The competition from lumber merchandisers, pipe fitter merchandisers, electrical jobbers and similar concerns is decidedly a menace for the Travis Perkins. However, Travis Perkins is the market leader in the builders’ merchandiser market in the UK presently ( Annual Report, 2013 ) . The turnover of the Group’s largest national rival generates less than half of the turnover in the Group’s addressable markets ( Annual Report, 2013 ) . The broad scope of merchandises and subdivisions across the UK has made it an advantage that few rivals can catch up.

2.3 Company scheme

Travis Perkins has reviewed its scheme to do it a better option to accomplish its Mission ( Appendix 7.1 ) in December 2013 due to the bettering economic system and the alterations of the Board ( Annual Report, 2013 ) .

The new scheme ( Appendix 7.2 ) aimed to increase the capital investing to heighten the bing market grosss and net incomes and increase the quality of the services to fulfill clients and better the stockholders returns ( Annual Report, 2013 ) . The realigned divisional construction ( Appendix 7.3 ) and the enlargement ( Appendix 7.3 ) of each division besides played a important function in presenting the aims of the scheme.

The portfolio direction of the capital investing has made a competitory advantage for Travis Perkins to supply about all the types of edifice merchandises and services to the building market. The direction of the capital invested make it a better usage to make of the stockholder value. In recent old ages, the acquisitions made all purpose to spread out in new and complementary concern countries which demonstrates Travis Perkins’s purpose to put capital in assuring market ( Annual Report, 2013 ) . Scale advantage has do an efficient supply concatenation to derive client trueness. The Group besides benefit from economic systems of graduated table in lower costs and shared IT systems. All these issues bring a cost efficiency and better relationship with co-workers and clients which will do the Group more attractive to make concern with. The client invention better the client satisfaction and do it a better purchasing action.

However, compared with other rivals, Travis Perkins narrows its activities in UK and Ireland to restrict the enlargement and chances in emerging markets. For illustration, Wolseley PLC operates in six geographic countries to do concern as a local standardized nucleus procedure to derive market share.However, in the UK market, Wolseley is non the largest operator, Wolseley has much more gross revenues and returns in other markets. In add-on, Wolseley makes their concerns at a higher return by bottom-up elaborate resource allotment to turn faster than the competition. It is more efficient for trade distributer.

3. Fiscal Statement Analysis

3.1 Income Statement Analysis

3.2 Balance Sheet Analysis

3.3 Cash Flow Statement Analysis

3.4 Other Ratios Analysis

4. Stock Market Analysis

4.1 Share monetary value public presentation analysis

Beginning: Google financei??2014

Beginning: Google financei??2014

Beginning: Google financei??2014

Beginning: Google financei??2014

Beginning: Google financei??2014

4.2 Stock market indexs analysis

4.2.1 Discussion of EPS and P/E

4.2.2 Discussion of dividend policy and D/Y

5. Drumhead and Decision

5.1 Drumhead by SWOT analysis

5.1.1 Strengths

Travis Perkins has a broad scope portfolio of concerns to enable it gaining control wide client base from terminal users and big building merchandisers and increase its growing from all markets. The Group besides operates a strong concern theoretical account with long term relationships with its providers and clients. The enlargement will non act upon the cost of the company since the concern theoretical account gives the flexibleness and cost efficiency. Even the economic downswing has effected all the concern, the fiscal public presentation of Travis Perkins is still in steady growing. The strong fiscal consequences will supply Travis Perkins a fiscal flexibleness in capital enlargement.

5.1.2 Failings

As mentioned above, the operations are concentrated chiefly in UK which limits the chances to put and makes it a higher concern hazard than other rivals. Travis Perkins will rely more on the demand and status of the market in UK non like other rivals with more flexibleness in the market.

5.1.3 Opportunities

Fortunately, the economic system and building in UK lead to the fluctuations and uncertainnesss over last few old ages but the mentality is positive where Travis Perkins can prehend the chances to spread out grosss and make stockholders value. Recently, the on-line incursion in retail has experienced a high growing. In the edifice stuffs market, the degree of incursion is expected to increase which is a great chance.

5.1.4 Menaces

Travis Perkins faces many local or other national operators in turn the competitory force per unit area may take to decrease in monetary value decidedly ensuing the net incomes and enlargement. Further more, the alteration of client purchasing behaviour, integrating of makers and client passage from distributer to maker will mostly impact Travis Perkins’ concern public presentation.

5.2 Recommendations for investors

Through the full analysis, Travis Perkins has a bettering mentality in 2014 due to the market status. The company will profit from the building and DIY emerging market which will retrieve for the following few old ages harmonizing to the prognosiss.

However, there still exists uncertainnesss in lodging and building. It is merely the beginning of the recovery and there is a clip slowdown from builders’ merchandiser and place betterment markets.

I strongly recommend to wait boulder clay 2014 twelvemonth terminal for investors who want to purchase Travis Perkins portions now. It will demo a clear tendency of the increasing of the portions for some clip.

6. Bibliography

Google Finance. 2014.Travis Perkins plc.[ Online ] . [ Accessed 22 April 2014 ] .Available from:

hypertext transfer protocol: //www.google.com/finance? q=LON % 3ATPK & A ; ei=jS11U9DNFYj6wAPkrIGYDQ

Travis Perkins. 2014.History.[ Online ] . [ Accessed 22 April 2014 ] .Available from: hypertext transfer protocol: //www.travisperkinsplc.co.uk/about-us/history

Travis Perkins. 2014.Scheme.[ Online ] . [ Accessed 22 April 2014 ] .Available from: hypertext transfer protocol: //ir.travisperkinsplc.co.uk/strategy.aspx

7. Appendixs

7.1 The Mission of Travis perkins

‘Continue to present better returns by seting in topographic point and turning the best concerns, with outstanding people supplying comprehensive edifice stuff solutions to everyone, making, keeping, mending and bettering the built environment… assisting to construct Britain.’ ( Annual study, 2013 ) .

7.2 The Strategy of Travis perkins

( Capital Markets Day, 2013 )

7.3 Divisional construction of Travis perkins

( Annual study, 2013 )

( Capital Markets Day, 2013 )

Cite this A Strategic Report on Travis Perkins

A Strategic Report on Travis Perkins. (2017, Jul 09). Retrieved from https://graduateway.com/a-strategic-report-on-travis-perkins/

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