Travis Perkins ratings affirmed at BB+ before Fitch withdraws coverage

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Travis Perkins BB+ affirmed, withdrawn

Highlights

Fitch affirmed Travis Perkins Plc's Long-Term Issuer Default Rating at 'BB+' with Stable Outlook, then withdrew coverage for commercial reasons.
Fitch forecasts 2025 EBITDA at GBP173 million, below previous estimates of GBP216 million, with EBITDA margin dropping to 3.8% from 4.5% in 2024.
Travis Perkins' free cash flow remains weak but neutral-to-positive through 2026–2029, helped by cash-preservation, capex discipline, and inventory management, despite UK market concentration risks.

Rating action and financial outlook

As reported by Fitch Ratings, the agency affirms Travis Perkins Plc's Long-Term Issuer Default Rating at 'BB+' with a Stable Outlook and simultaneously withdraws the ratings, ending analytical coverage of the company for commercial reasons.

The agency says the affirmation reflects strong cash-preservation measures that help offset weaker EBITDA margins in a difficult market environment, while supporting a financial structure and flexibility consistent with the rating. Fitch expects EBITDA margins to decline further to 3.7% in 2026 before improving over 2027 to 2029, with free cash flow remaining weak for the rating and net leverage staying within rating sensitivities at 1.8x to 2.2x over that period.

Fitch adds that 2025 revenue and EBITDA come in below its expectations, with Fitch-adjusted EBITDA of about GBP173 million versus a forecast of GBP216 million. Weak consumer spending, subdued housebuilding activity and commodity price deflation reduce earnings, and the Fitch-adjusted EBITDA margin falls to 3.8% from 4.5% in 2024.

The agency expects EBITDAR net leverage to reduce to 2.2x at end-2026 and then improve gradually through 2029, driven mainly by higher cash balances and cash-preservation measures, with some support from margin gains from 2027. It also forecasts EBITDAR fixed-charge coverage to weaken to 2.0x in 2026 before recovering to 2.5x by 2029.

UK market exposure shapes recovery prospects

Fitch says Travis Perkins' cash flow management remains a key support, with its forecast assuming low base capex in line with company guidance, continued working-capital improvement through inventory management and low dividends in 2026. Those measures support neutral-to-positive free cash flow through 2026 to 2029.

Within the group, Toolstation UK continues to improve profitability and perform relatively well in a difficult market, helped by further price inflation and new store openings. Fitch says the business continues to gain share as stores mature, reinforcing its position as the number two supplier in the UK market, while Toolstation Benelux remains under pressure and may face further restructuring costs.

Travis Perkins remains the UK's largest distributor of building materials, serving construction and home-improvement markets through about 1,500 stores. Fitch says that scale positions the company to benefit when homebuilding activity recovers, but its heavy concentration in the UK, combined with exposure to cyclical construction and housing markets and its planned exit from France, continues to constrain the rating despite longer-term demand support from housing shortages and sustainability investment.

In our earlier article on Persimmon Plc (PSN), we reviewed a technically mixed setup: the shares were trading above short- and medium-term moving averages but still below the 200-day average, pointing to lingering long-term pressure. We also highlighted key levels around GBX 1,100 (resistance/support) and noted that overbought signals and a lack of fresh catalysts could limit upside and trigger consolidation or profit-taking.

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