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Travis Perkins helps itself

RESULTS: Builders' merchant Travis Perkins is making cost synergies an art and loyal shareholders are rewarded with a 25 per cent boost to the full-year dividend
February 21, 2013

Another impressive dose of self help lifted last year's adjusted operating profits by 4.3 per cent to £327m for Travis Perkins (TPK), which is pretty good considering that the builders' merchant was up against the effects of continued economic uncertainty and the wettest weather conditions in living memory. In fact, while the UK's inflation rate was 3.1 per cent in 2012, the group's like-for-like overheads fell by 2.3 per cent despite further investment in the business.

IC TIP: Hold at 1287p

Much of the savings came from integrating BSS, the trade plumbing supplies business acquired in 2011. Having beaten an initial savings target of £8m by a mile, management found £32m of savings last year and reckons there is a further £5m to be had this year. This helped operating margins edge up by 0.1 per cent to 6.7 per cent and turnover rose marginally, too, driven by a positive contribution from the Toolstation acquisition and a full contribution from 13 ex-Focus stores which opened in the autumn of 2011.

Divisional performances varied. Like-for-like sales were flat on the retail and general merchanting sides, but specialist merchanting delivered 2.3 per cent underlying sales growth.

Liberum Capital is forecasting 2013 adjusted EPS of 103.3p, up from 95.1p in 2012.

TRAVIS PERKINS (TPK)
ORD PRICE:1,287pMARKET VALUE:£3.15bn
TOUCH:1,286-1,287p12-MONTH HIGH:1,311pLOW: 901p
DIVIDEND YIELD:1.9%PE RATIO:12
NET ASSET VALUE:942p*NET DEBT:20%

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20083.1814668.611.4
20092.9321388.4nil
20103.1519769.615.0
20114.7827090.320.0
20124.84313108.925.0
% change+1+16+21+25

Ex-div: 1 May

Payment: 30 May

*Includes intangible assets of £2.23bn, or 912p a share