Builders’ merchant Travis Perkins has reported a rise in both revenue and profit for the six months up to 30 June, but said recovery will continue to be slow and uneven.
In the company’s interim results, published this morning, revenue was up by 5% to £1,522M compared to £1,454M this time last year, while adjusted profit before tax up rose 24% from £90M to £112M.
Net debt was reported at £410M, down from £527M last year. The Group’s adjusted operating margin fell slightly, at 7.9% against 8.1% last half-year.
“We have performed ahead of our expectations in the first half of 2010.”
Geoff Cooper, Travis Perkins
Chief executive Geoff Cooper said the company will aim to stretch its lead over its competitors. “We have performed ahead of our expectations in the first half of 2010,” he said. “While we continue to see modest market growth following a severe recession, we view the future with confidence.”
The firm’s statement said current market conditions, while good in comparison to last year, remain tough. “Against the historic levels of new building and repair works, the market has only progressed from appalling in 2009 to miserable now,” it said.
“However, the current low level of activity … still represents a significant gain in market volume from the troughs of last year. Since activity is still some way off peak levels, we expect further growth, albeit gradual.”
The company cited poor weather at the start of 2010 and public spending cuts as being two key challenges in the past six months. It said it expects “significant uncertainties” going forward, and for any recovery to be “uneven and gradual”.
“The market has only progressed from appalling in 2009 to miserable now.”
Travis Perkins interim results report
“Public sector new construction, which we estimate represents less than 10% of our revenue, is certain to come under considerable pressure – but with the full effect probably not emerging until the second half of next year,” said the report.
For 2011, the firm said it expects a gradual recovery in the private sector and repair, maintenance and improvement (RMI) work will offset the effects of cuts in public investment. But the rise in VAT schedule for 1 January 2011 may cause trading to slow, said Travis Perkins.
Activity will now continue for expansion of the group, especially through the agreement to buy plumbing and heating company BSS
Group for £557.6M, announced earlier this month.