Travis Perkins unveils £120m pre-tax profit

Travis Perkins, the builders’ merchants, has emerged from the first six months of 2008 with barely a downturn in its profitability – interim pre-tax profit of £120m was only £5m short of the figure in the same period of the previous year.

Financial results show turnover of £1.7bn in the period to 30 June (comparable figure in the previous period: £1.6bn).

Geoff Cooper, chief executive, said: “The half-year results show good progress against a background of weakening markets. We continued to gain like-for-like market share in both our merchanting and retail divisions while preserving our gross margins.

“We generated strong cash flow. We invested £106m in capital expenditure and acquisitions. The latter occurred mainly in the first quarter when the availability of acquisition opportunities increased in advance of the capital gains tax changes implemented from April.

“Despite this outflow of investing activities, we reduced our net debt from £940m at the previous year-end to £910m at the end of June.”

Travis has refinanced its UK bank debt, securing a new £1bn, 5-year facility in April.

The group’s pension fund wobbled a little, with the deficit jumping from £16m to £43m as a result of a weakening in investment values of the fund’s assets. The deficit would have widened still further if liability discount rates had not lifted from 5.8% to 6.4%.

Travis’s businesses serve a wide range of construction activities, with new housing-related activity currently accounting for 18% of turnover – this figure being split between housebuilders themselves (6%) and contractors who work for housebuilders (12%).

This area of activity’s contribution to group profit was less than 18%.

By way of contrast, Travis says that activity levels have been strong in the government and commercial construction sectors and have also held up well in repair, maintenance and improvement (RMI).

Travis thinks that the level of its housing-related business will fall but adds that “contractors’ forward orderbooks for large construction projects, boosted by the Olympics and Thames Gateway programmes, indicate we can expect this source of business to remain firm in 2008, but with a contraction beginning in 2009”.

The group trades from 1,206 locations, with a further 20 branches operated by Toolstation, a recent acquisition.

In all, this represents a rise of 101 over the number of trading outlets at the end of 2007.