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The Travis Perkins Group has announced that it is looking to sell its plumbing and heating division – which includes PTS and City Plumbing – and focus on areas of its business which it considers more profitable, such as its builders merchant business and Toolstation UK. In a statement to the City, the company said that the disposal of the plumbing and heating division would allow more focused management attention and capital deployment on core trade business. The change in strategy follows an announcement in July when the Group said that it would undertake a comprehensive review of its business, with a view to driving stronger performance and enhanced value for shareholders over the medium term.
The Group says it will now focus on simplifying the business to reduce complexity, speed up decision making and improve agility whilst further reducing the above-branch and distribution cost base. It is targeting further cost savings of £20-30m which will be delivered over the next 18 months. As part of the process of simplification, it says that now is the time to explore the potential sale of the plumbing and heating division, which will facilitate more focused management attention and capital deployment on the higher returning areas, and creates further opportunities to simplify the Group and reduce costs.
Group CEO John Carter comments: “We have developed a clear plan to focus on delivering best-in-class service to our trade customers, and to simplify the Group to reduce complexity, speed up decision making and reduce costs. Our trade businesses hold strong positions in attractive markets, and these initiatives will enable us to concentrate our management time and capital in the highest returning areas.”
According to the London Evening Standard, the plumbing and heating business accounts for around 13% of the company’s profits and could fetch up to £500 million.