Travis Perkins to cut around 2,500 jobs and close 165 branches as it braces for recession

News15 Jun 2020Luke Cross

Travis Perkins is set to make around 2,500 people redundant as it braces for a UK recession and seeks to “preserve the future competitiveness of the business”.

The UK’s biggest builders’ merchant Travis Perkins is cutting jobs and closing branches as it braces for recession (picture: Getty)

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Travis Perkins to cut around 2,500 jobs and close 165 branches as it braces for recession #ukhousing

Travis Perkins is set to make around 2,500 people redundant as it braces for a UK recession and seeks to “preserve the future competitiveness of the business” #ukhousing

The UK’s largest builders’ merchants published an update on business restructuring and efforts to support its liquidity position today (15 June).

The group said it has continued to open more of its branches since lockdown began to meet social distancing working practices, with volumes getting back to near prior year levels, subject to customer mix and region.

But despite the “significant recovery in trading volumes in recent weeks” the group said “it is evident that the UK is facing a recession and this will have a corresponding impact on the demand for building materials during 2020 and 2021”.

This is resulting in “regrettable but necessary actions to preserve the future competitiveness of the business”.

The business has started a consultation process with a view to making around 2,500 roles (nine per cent of the workforce) redundant – across distribution, administrative and sales functions.

It is also consulting on the closure of around 165 branches, representing approximately eight per cent of the group’s network.

The closures are concentrated in the merchant businesses, in particular the Travis Perkins General Merchant, focusing on small branches where it is “either difficult to implement safe distancing practices, or where marginal profitability will be eroded in a reduced volume environment”.

It is also rolling out actions to reduce the “monthly operational cash burn rate” while continuing to “carefully manage working capital”.

At 12 June 2020, the group had cash deposits of £363m, which together with the undrawn £400m revolving credit facility means overall liquidity headroom of £763m.

However, the business has also taken “the prudent step” to agree a relaxation of the covenants with lenders.

Its interest cover covenant has been waived for both June and December 2020; the net leverage covenant has been relaxed to 3.5x for June 2020 and waived for December 2020; and a minimum liquidity headroom covenant has been established for September and December 2020.

Nick Roberts, chief executive, said that despite significant challenges across the group he has been “hugely encouraged by the flexibility of our colleagues to adapt our business models successfully and at pace”.

“Whilst we have experienced improving trends more recently, we do not expect a return to pre-COVID 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.

“This is in no way a reflection on those employees impacted and we will do everything we can to support them during this process.

He said the group has “a robust balance sheet” and a “strong liquidity position”.

He added: “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.”