3rd Mar 2016 09:58
LONDON (Alliance News) - Shares in builders' merchant Travis Perkins PLC were trading higher on Thursday morning after the group expressed confidence on its outlook, even as a tough repair, maintenance and improvement market in the UK dragged on its 2015 profit.
The group said pretax profit for the year to the end of December was GBP224.0 million, sinking 30% from the GBP321.0 million posted in 2014.
Travis Perkins booked a GBP141.0 million non-cash impairment charge on its Plumbing Trade Supplies and F&P Wholesale businesses due to the challenging conditions in the UK repair, maintenance and improvement market that it had flagged in its third-quarter trading update in October.
But the group said RMI sales in the UK improved in January and February, giving it confidence on its medium-term outlook. Reflecting that confidence, Travis will pay a final dividend of 29.25 pence per share, taking its total dividend up to 44.0p from 38.0p, a 16% year-on-year rise.
Shares in the company were up 4.0% to 1,867.00 pence, one of the best performers in the FTSE 100.
Revenue increased to GBP5.94 billion from GBP5.58 billion, but like-for-like revenue growth slowed to 3.8% from 7.3%, reflecting tough market conditions, particularly in Travis's Plumbing & Heating division.
Plumbing & Heating sales fell 1.3% on a like-for-like basis in the year, partly due to disruption from the re-segmentation programme Travis undertook in the unit. This programme was accelerated in 2015, with the majority of branch conversions and closures finished ahead of plan. General Merchanting sales were up 3.9% on a like-for-like basis, with good heavyside and tool hire performances.
Contracts like-for-like sales grew 8.5%, driven by Travis's Keyline and CCF units winning market share, while its Consumer sales rose 5.3%, again thanks to market share gains and margin improvements in its Toolstation arm.
But the group said it has expanded its network, with a net 53 new branches and stores opened in the year and has made progress on its strategic investments in its general merchanting supply chain.
Travis Perkins added the progress made on its strategic initiatives, including modernising its General Merchanting arm, restructuring its Wickes DIY chain, and retooling its Plumbing & Heating business, had positioned the business well for the future, in particular a push to leverage its scale advantage and win market share.
"The group has delivered a good performance in 2015 despite the weaker than expected RMI market in the second half of the year. We believe that the growth drivers in our markets remain strong and welcome the return to growth of mortgage approvals and secondary housing transactions in the second half of 2015," said Chief Executive John Carter.
"This gives us further confidence that through our strategy we will successfully deliver against our medium-term targets of sales outperformance, low double-digit profit growth and improving returns," Carter said.
By Sam Unsted; [email protected]; @SamUAtAlliance
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