Against snow-hit comparatives, building and construction supplier Travis Perkins enjoyed a good start to the year before the effects of government cutbacks, tax increases and low consumer confidence took their toll in the second quarter.
Finance director Paul Hampden Smith estimates that market volume has declined by 2 per cent and the outlook remains fragile. With the key indicator of residential property sales stuck at 70,000 per month, against a peak of 120,000 per month, he doesn't see much prospect of improvement until 2013. This will continue to depress market volumes, although the group has achieved cost savings faster than expected following the acquisition of BSS late last year. Around £6.5m of savings were achieved in the first half and targeted annual savings of £25m should be reached by the end of 2012, a year ahead of schedule.
The recent closures of competitors Focus and Moben will reduce retail capacity from the second half onwards, although the impact on trading remains to be seen. Nevertheless, the group expects that the difficult market will continue to put pressure on weaker competitors and lead to further consolidation, particularly in merchanting. The group bolstered its retail division by acquiring 13 former Focus stores for £8.4m.
Evolution Securities is maintaining its full-year pre-tax profit estimate of £297m, giving an EPS of 88.7p (£217m and 77.2p for 2010).
| TRAVIS PERKINS (TPK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 909p | MARKET VALUE: | £2.2bn | |
| TOUCH: | 908-911p | 12-MONTH HIGH: | 1,139p | LOW: 743p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 842p* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.52 | 107 | 37.9 | 5.0 |
| 2011 | 2.35 | 129 | 43.1 | 6.5 |
| % change | +54 | +21 | +14 | +30 |
Ex-div:12 Oct Payment:14 Nov *Includes intangible assets of £2.11bn, or 872p a share | ||||
