Plumbing and heating merchant group BSS increased sales by 9.9% in the six months to September 30.
Group revenue was £685.9m. Within that, like for like sales growth was 3.3%, down from 8.1% for the same period last year. Gross margin was 23.0%, pre-tax profits were up 11.4% to £29.3m and the interim dividend was held at 1.89p per share (2007: 1.89p).
The revenue from the domestic division, which includes PTS and F&P Wholesale, was up by £38.9m (9.8%), the impact of 16 new branches added 7.4%, with 2.2% of growth on a like for like basis. Operating profit, at £17.8m was up 2.3%, while margins slid back to 4.1% from 4.4%.
A further six branches were opened in the seven weeks since the end of September. The slowdown in residential new housebuilding slowed the rate of sales growth by around 3.5%, with the result that new build residential revenue now accounts for less than 2% of Group sales. However, the new branch openings and new initiatives, such as the first dedicated renewables branch in Aylesford, Kent, helped to offset the decline.
F & P Wholesale had a strong first half with good sales growth and improved profitability. The service offering to independent merchants and strength of the business model has increased in popularity as credit conditions have tightened in the wider economy. Investment has been made in stock and distribution infrastructure and this has underpinned the sales growth achieved.
Revenue from the Industrial division, which includes BSS increased by 10.0% to £188.7m, with like for like revenue growth of 7.6%. The increase is largely thanks to earlier investment in stock and infrastructure plus managing to achieve higher sales prices.
The Specialist Division delivered sales of £62.9m, a 10.2% increase on the prior year, primarily reflecting the impact of the Birchwood Products acquisition.
Gavin Slark, group chief executive said: “The Group has performed well in challenging trading conditions with good growth in revenue and profitability. Growth initiatives and a focus on serving repairs and maintenance markets have offset the impact of a weaker construction sector. New build residential is less than 2% of Group revenue. The Group continues to generate positive cash flow and has a strong financial position.
Despite a deteriorating economic outlook, we believe that we can continue to make progress in the second half. The Group is positioned to respond to the opportunities that a recessionary market offers.”