Travis Perkins’ recently storming like-for-like sales growth - for merchanting, up 22 per cent in January and up 10 per cent in the first three weeks of February - needs to be seen in light of last year’s torrid, snow-strewn start. However, there are genuine reasons to be encouraged by the builders' merchant and DIY chain’s progress.
Group’s sales growth in 2010, which includes 5 per cent like-for-like growth, was achieved in a broadly flat market. So it seems investment in incremental improvements and the supply chain is helping win market share. Indeed, the underlying operating margin was also robust, rising 0.1 per cent to 7.8 per cent, and management believes both its retail and merchanting businesses boast sector-leaders. Ignoring exceptional items, and underlying pre-tax profit grew 20 per cent to £217m and EPS rose 5 per cent at 77.2p. In coming years, December's £477m acquisition of plumbing-supplies retailer BSS should provide £25 of annual savings.
Meanwhile, a cash generation focus is yielding impressive results. Were it not for the BSS acquisition and a one-off £35m pension payment, net debt would have fallen by £205m to £262m. Investec Securities expects adjusted pre-tax profit of £280m for 2011, giving EPS of 83.9p (2010: £217m/74.6p).
| TRAVIS PERKINS (TPK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,054p | MARKET VALUE: | £2.5bn | |
| TOUCH: | 1,053-1,055p | 12-MONTH HIGH: | 1,139p | LOW: 648p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 15 | |
| NET ASSET VALUE*: | 807p | NET DEBT: | 40% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p**) | Dividend per share (p**) |
|---|---|---|---|---|
| 2006 | 2.85 | 232 | 109 | 29.5 |
| 2007 | 3.19 | 261 | 121 | 35.4 |
| 2008 | 3.18 | 146 | 68.6 | 11.4 |
| 2009 | 2.93 | 213 | 88.4 | nil |
| 2010 | 3.15 | 197 | 69.6 | 15.0 |
| % change | +8 | -8 | -2 | - |
Ex-div: 4 May Payment: 31 May *Includes intangible assets of £2.1bn, or 869p per share **Adjusted for 2009's seven-for-10 rights issue | ||||
