Retail sales boost Travis Perkins' performance
Published: 30 July, 2009
NORTHAMPTON: Travis Perkins interim results published today showed a better than expected performance. This helped boost the share price that jumped almost 11% to reach a 14-month high of 780p.
Revenue was down 13% to £1454.2m with profit before tax of £90.4m in the six months to June 30, beating analysts' forecasts of £60-71m.
Like-for-like turnover per trading day at Travis Perkins' building supplies business fell 18.5% in the first half. Like-for-like turnover at the Wickes retail business was down 2.4% on the same basis, reflecting a 16.6% rise in turnover of kitchens and bathrooms products.
The 27% profit fall was limited by cost cutting although the network has been maintained with only three closures out of 1223 branches. The company has cut stock levels and actively avoided less profitable work and also benefited from stronger than expected sales of kitchen and bathrooms. The demise of MFI was a factor in this.
Chief executive, Geoff Cooper, said markets were stabilising but he does not expect a significant recovery until the end of next year and predicts more builders' merchants and retailers will close this winter.
Travis Perkins interim results continue the string of better-than-expected results from merchants but Cooper remains cautious. He said: "We think things are gradually settling down into the trough. However, we don't think that we're going to see any significant recovery until probably the end of next year,"
The downturn in the building trade had been deeper than the firm had expected, although there were now signs that it was stabilising, he said.
The retail slowdown has been less severe than Travis Perkins expected, but Cooper was cautious for the future, pointing out that VAT is due to rise next year.
Cooper said the firm expected to cut overheads by £60m this year, up from its original target of £50. Last year the company cut 2500 jobs and a further 400 from its 14 000-strong workforce this year by not filling vacant positions, he said.