30th Jul 2014 07:03
LONDON (Alliance News) - Building merchants Travis Perkins PLC Wednesday reported an increase in pretax profit for the first half, boosted by a combination of improving market conditions, increasing customer confidence and the successful introduction of a number of self-help initiatives.
FTSE100-listed Travis Perkins posted pretax profit of GBP153.7 million for the six months ended June 30, up 14% from GBP134.7 million a year earlier, as revenue rose to GBP2.73 billion from GBP2.45 billion.
The company saw growth across all its business segments with General Merchanting leading the way. Travis Perkins said General Merchanting revenue rose 15% on a year earlier, with progress made in modernising the business through range trials, new warehouse facilities and branch opening programme.
Contracts revenue grew 12% despite gross margins falling slightly due to selling price deflation, product mix changes and selective price investment, it said.
The consumer division, which incorporates DIY store chain Wickes, also did well, with revenue up 8.8%. In the first half two Wickes stores were relocated, optimising space and improving profitability, Travis Perkins said. In addition, eight new Toolstation branches were opened as implants in Wickes.
Travis Perkins said its Plumbing and Heating division improved despite challenging trading conditions. It saw revenue rise 8.5% with the boiler segment contributing significantly to this.
However, it said: "Given the significant growth in boiler sales in the first quarter and the marked deterioration in the market in the second quarter it is difficult to gauge how the market will perform until the heating season is underway from September onwards."
Overall, the company said its adjusted operating margin increased by 4 basis points to 6.4% from 6.0% a year earlier.
Looking ahead, the company said improvements in consumer confidence, the UK government's continued support for the UK housing market and solid mortgage availability provide a "sound backdrop" for the remainder of the year.
"We have outperformed our markets and see good growth opportunities for stepping up our investment in the customer proposition, leveraging our superior scale, supply chain capabilities and for network expansion and format optimisation," Chief Executive John Carter said in a statement.
"Trading is consistent with our expectation and with lead indicators in our different markets encouraging, the group is expected to show continued solid growth for the remainder of the year," he added.
On the back of its performance the company increases its interim divided to 12.25 pence from 10.00 pence a year earlier.
Travis Perkins shares were up 0.8% at 1,658.00 pence at the open Wednesday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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