Travis Perkins makes £150m profit but predicts 25% fall in demand by 2009 Q3

Travis Perkins, the builders’ merchant, has made a pre-tax profit of £150m even after an exceptional cost of more than £40m.

Travis enjoyed a profit of £260m in 2007.

The latest financial figures cover the 12 months to 31 December 2008.

Turnover in both years was almost identical at £3.2bn. The latest profit figure was in line with expectations.

Geoff Cooper, chief executive, said: “We took early action in 2008 to deal with the increasingly tough trading environment and have set our business ready to manage continuing difficult market conditions in 2009.

“Our businesses continue to outperform competitors. In 2008 our divisions grew market share on a like-for-like basis and continue to record leading operating margins in each market segment.

“A number of competitors have already closed outlets and we expect further sector rationalisation, improving our prospects for continued like-for-like market share gains.

Actions taken to deal with the fall in construction activity have resulted in an exceptional charge of £56m.

Cooper said: “Based on our analysis of previous recessions in our sector and our monitoring of lead indicators, we estimate that volumes purchased in our markets will fall by some 25% from a peak in early 2008, with the trough being reached by the third quarter of 2009.

“With inflation, market share gains, maturing performance from recently opened stores and full year effects, our annual revenue for 2009, compared with 2008, is expected to decline by less than our peak to trough estimated decline of 25%.”

Travis’s early sales performance in 2009 reflects these trends with like-for-like sales in the merchanting division down by 16% in January.

Cooper added: “As the contraction in our market has deepened, we have experienced the normal pressure on margins caused by some merchants delaying the introduction of price rises, and by some retailers seeking to support volumes through heavily advertised price promotions.

“Despite this we have been able to increase gross margins in 2008 by 0.2%.”