The acquisition of trade plumbing supplies business BSS has helped the return to profit growth of building materials group Travis Perkins, thanks to substantial cost savings. Last year alone, these amounted to £20m, with a higher-than-expected £30m forecast for this year. However, following a 31 per cent rise in underlying operating profits to £313m in 2011, management anticipates a slow year ahead given signs of a sluggish UK house market, a struggling construction sector and falling public spending.
Trade sales were the driving force behind the results with like-for-like (LFL) sales rising by 9.4 per cent and total sales up 10.9 per cent to £2.33bn, helped by a 5.5 per cent price hike. However, the weakness of consumer spending was noticeable in the group's retail business where overall LFL sales fell by 1.4 per cent, while the division's operating profit dropped £14m to £45m. BSS grew LFL revenues by 2.9 per cent, but overall revenue was down £22m at £1.43bn following the sale of 14 stores as part of its deal with the Office of Fair Trading (OFT). The OFT has also expressed concerns over Travis Perkins' takeover of Toolstation.
Broker Peel Hunt upgraded its pre-tax forecast by 3 per cent to £310m for 2012, giving EPS of 94.5p (£297m and 93.1p in 2011)
TRAVIS PERKINS (TPK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,064p | MARKET VALUE: | £2.6bn | |
| TOUCH: | 1,063-1,066p | 12-MONTH HIGH: | 1,096p | LOW: 675p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 864p* | NET DEBT: | 28% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2011 | 4.78 | 270 | 90.3 | 20.0 |
| % change | +52 | +37 | +30 | +33 |
Ex-div: 2 May Payment: 31 May *Includes intangible assets of £2.1bn, or 859p a share | ||||
