Quick take: stabilised trading, clear-the-decks charges, balance sheet reset
Travis Perkins has posted a mixed 2025. Underlying trading steadied, Toolstation UK pushed on, but profitability in Merchanting remained under pressure. The Group booked heavy non-cash write-downs, tipping statutory results into a loss. The big positive is cash: strong working capital inflows and disciplined capex flipped the business to net cash before leases for the first time in nearly 30 years and reduced leverage.
With sector veteran Gavin Slark starting as CEO on 1 January 2026, the focus now shifts to execution, market share and margin rebuild, all supported by robust liquidity.
The headline numbers investors care about
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue | £4,565m | £4,607m | (0.9)% |
| Group like-for-like revenue | 0.3% | (5.3)% | Improved |
| Adjusted operating profit | £133m | £152m | (12.5)% |
| Adjusted EPS | 30.8p | 36.6p | (15.8)% |
| Operating profit | £(97)m | £2m | n.m. |
| Loss after tax | £(176)m | £(77)m | (128.6)% |
| Dividend per share | 12.0p | 14.5p | (17.2)% |
| Net debt / adjusted EBITDA | 2.1x | 2.5x | Better |
| Net cash before leases | £1m | £(191)m | £192m swing |
| Liquidity headroom | £803m | £590m | +£213m |
Note: liquidity headroom comprises cash holdings of £427m and undrawn committed facilities of £390m.
Merchanting: pricing pressure but second-half recovery
Merchanting revenue fell 1.7% to £3,722m, with like-for-like flat at (0.1)%. Volumes edged up 0.5% but were fully offset by sales price deflation of 0.6% amid an over-supplied market. Adjusted operating profit dropped 18.1% to £122m, with margins at 3.3% as operational gearing amplified the top-line squeeze.
The bright spot was momentum: like-for-like sales turned positive in the second half, up 1.7% in Q3 and 2.1% in Q4, helped by targeted promotions in plasterboard, PIR insulation board and class B bricks, plus sales incentives and service improvements. Management reports 45,000 net new customer accounts opened in 2025. That suggests the sharper commercial proposition is resonating, albeit at thinner margins for now.
Toolstation UK delivers; Benelux still a drag
Toolstation revenue rose 2.7% to £843m. UK performance was the star, with adjusted operating profit up 29.4% to £44m on better purchasing, pricing and supply chain efficiencies. Club membership is now around 700k, app adoption is rising, and average order values among members have increased. Eight UK stores opened and five closed, taking the estate to 590. Up to 20 openings are expected in 2026, including a new urban convenience format, Toolstation GO.
Benelux remains challenging. The division posted a £11m adjusted operating loss, a slight improvement, but a website upgrade caused disruption and online sales declined 1.8%. Management expects a similar level of loss in 2026 and is taking actions on costs and supply chain.
Cash, debt and refinancing: why the balance sheet matters now
Free cash flow jumped to £206m (2024: £109m), driven by a £136m working capital inflow as supplier payments normalised post-Oracle implementation and overdue debts were collected. Base capex was held to £60m, with freehold disposals generating £51m of cash proceeds and property profits of £10m.
Crucially, net debt before leases moved to a £1m cash position and total net debt fell by £224m, taking net debt to adjusted EBITDA down to 2.1x. The £250m February 2026 sterling bond was fully refinanced with £350m of investment-grade US private placement notes, leaving no significant refinancing requirements until 2028. Overall liquidity headroom sits at £803m. That gives Travis Perkins resilience and optionality to compete on price and service while the market is soft.
Adjusting items explained: what the £222m charges cover
Statutory results were hit by £222m of adjusting items, most of which are non-cash:
- Merchanting impairments of £111m, including £67m of branch-level impairments across 196 sites and a £44m goodwill impairment for CCF.
- Toolstation Europe impairments and restructuring of £99m, primarily a write-down of goodwill, property and right-of-use assets in Benelux, partly offset by a release related to Toolstation France provisions.
- Restructuring costs of £12m tied to headcount reductions in central and regional teams.
- Staircraft sale-related loss of £3m, following its £21m divestment.
Only £8m of these items were cash in 2025, with a further c.£6m severance cash outflow in Q1 2026. In plain English: the bulk of the pain is accounting clean-up rather than cash drain, which should help comparability in future periods.
Dividend and 2026 guidance: what to expect
The Board proposes a final dividend of 7.5p, taking the full-year payout to 12.0p, consistent with the policy to pay 30-40% of adjusted earnings. On adjusted EPS of 30.8p, the payout ratio is at the upper end of that range.
For 2026, guidance is pragmatic given subdued early trading:
- Expected effective tax rate around 30% on UK-generated profits.
- Base capex around £80m.
- Property profits around £5m.
- Interest expense £6m higher from refinancing, partly offset by interest income on strong cash balances.
- Toolstation Benelux expected to post a similar loss to 2025.
Leadership and structure: tighter lines, clearer accountability
Gavin Slark joined as CEO on 1 January 2026. All Managing Directors now report directly to him, shortening lines of communication. The Group has also completed significant restructuring of central and regional roles to reduce overheads and embed the new IT system implemented in 2024.
My take: the good, the bad, and what really matters
Positives
- Balance sheet much stronger: net cash before leases, lower leverage at 2.1x, and £803m liquidity headroom.
- Operational stabilisation: Merchanting like-for-likes turned positive in H2, with 45,000 net new accounts.
- Toolstation UK execution: profit up 29.4% to £44m, with further store growth and the new GO format in 2026.
- Non-cash nature of most adjusting items reduces future noise in reported numbers.
Negatives
- Underlying profitability slipped: adjusted operating profit down 12.5% and margins compressed, especially in Merchanting.
- Benelux remains a drag with losses expected again in 2026.
- 2026 tailwinds are limited: base capex stepping up to ~£80m, property profits guided down to ~£5m, and interest costs £6m higher.
- Free cash flow benefited from a one-off working capital unwind; that boost is unlikely to repeat at the same scale.
Overall, this looks like a reset year that has laid foundations for recovery. The heavy impairments clear the decks, the balance sheet is in good shape, and commercial actions are showing up in H2 trading. The real test for 2026 will be sustaining like-for-like growth without buying it through promotions, nudging Merchanting margins up, and keeping Toolstation UK’s momentum while containing Benelux losses.
What to watch in 2026
- Merchanting like-for-like run-rate and gross margin trends as competitive intensity persists.
- Toolstation UK growth versus cost inflation, and early read-through from Toolstation GO pilots.
- Cash discipline: base capex around £80m, property proceeds, and working capital normalisation.
- Leverage trajectory towards the 1.5-2.0x target through the cycle.
- Any strategic update from the new CEO on portfolio shape, Benelux options and capital allocation.
In short, Travis Perkins has stabilised and strengthened its financial footing. If the second-half trading momentum can be maintained and margins begin to rebuild, the platform is there for earnings recovery when UK construction activity eventually picks up.
