Builders merchant group Travis Perkins has done better than expected in the six months to June 30, so much so that it plans to pay a dividend for the first time since last February.
Group sales rose 5% to £1,522m, with pre-tax profit up by 24% to £112m. Net debt was down by £103m to £410m and the operating margin was a very respectable 7.9%.
Both divisions, retail and merchanting, increased their market share on a like-for-like basis and the group has re-started its expansion programme, albeit on a cautious basis.
Chief executive Geoff Cooper, said: “We have performed ahead of our expectations in the first half of 2010. We remain determined to further develop our customer propositions via an exciting programme of organic growth initiatives with the aim of stretching our lead over competitors. While we continue to see modest market growth following a severe recession, we view the future with confidence.”
Turnover in the merchanting division was up 6.0%, with like-for-like turnover per trading day up by 5.4 %.
The four specialist merchanting businesses, Keyline, CCF, City Plumbing and Benchmarx, have also seen a recovery in their markets and boosted like-for-like sales during the period. While both Keyline and CCF have benefited from the slight new housing recovery, they are both still experiencing falling volumes from large commercial construction projects.
City Plumbing has enjoyed strong volumes, partly boosted by the boiler scrappage scheme, whilst the progress of Benchmarx in the trade kitchen market has picked up pace. The company says this is partly do with its exploitation “of customer dissatisfaction with the longer-standing merchants in this market”.
Some smaller Benchmarx units have been set up in a number of Travis Perkins and Keyline branches, and the rollout of City Heating Spares, on a similar basis, has begun in City Plumbing branches.
Merchanting operating margins were 9.3% over the six-month period, 0.6% higher than last year.
The group’s retail division – Wickes, Tile Giant and Toolstation – continued to take share on a like-for-like basis and a number of improvements in our proposition delivered good sales growth.
For the first half Wickes overall revenue increased by 1.7%. Like-for-like turnover per trading day was down 0.5% with core products down 3.3% and kitchen and bathrooms turnover up by 11.6%, although it has started to slow slightly as the appetite for bigger ticker items seems to be waning.
The group added 3 Wickes stand alone kitchen and bathroom stores in the first half and plans a further 2 in the second half.
Tile Giant’s like-for-like turnover for the six months was up 3.5%, with six outlets added during the period, taking the total to 92 at the end of June.
Associate company, ToolStation, outperformed its peers in the multi-channel sphere, with like-for-like sales growing by 50%. ToolStation traded from 66 stores at 30 June 2010 having opened 33 stores since December 2008 and expanded its central distribution facilities with a new warehouse in Redditch.
The group says that in the first six months of 2010 it has seen a gradual return of confidence in both performance and prospects, which has led to excellent results, the resumption of dividends and activity to continue the expansion – most notably through the offer, announced shortly after the period end, to acquire The BSS Group plc.