Yet sometimes glimpses on my sight,
Through present wrong the eternal right;
And, step by step, since time began,
I see the steady gain of man…
I was eating my breakfast when I read the Travis Perkins half-year results. So there I was, stopped in my tracks with a piece of toast half-way to my mouth, by an impressive 54% rise in turnover and an eye-watering 26% rise in profits.
Basically, Travis Perkins have gone and done what they do so very well. Keeping their heads down and out-performing the market. Again.
It clearly helped that they popped their heads above the parapet just long enough to buy BSS, but a quick peruse of the half-year results shows that, while BSS brought in a very nice £700m that wasn’t in the pot last year, the merchanting and retail divisions did quite nicely on their own thank you very much. And, on top of that, the cost savings anticipated by the synergies with BSS have been greater and come through much quicker than anticipated.
Is this a sign that things are now improving in the construction and merchanting worlds. Is this a sign that we are finally out of the doldrums and can expect a return to the heady days of 2007?
Err, no. Not exactly. Not at all in fact.
Look more closely and you’ll see that the good start to the year came before the effects of government cutbacks, tax increases and low consumer confidence took their toll in the second quarter.
The market volumes have fallen back and the housing market seems to have hit a ceiling with residential property sales stuck at 70,000 per month, against their peak of 120,000 per month. Result, the outlook is still fragile.
While the headlines yesterday were of the CIPS/Markit purchasing managers index which showed that construction is still growing, there is something that doesn’t feel quite right about it. The feeling on the ground, from manufacturers, merchants and smaller building concerns is that it is tough and staying tough for some considerable time.
Travis Perkins’ chief executive, the redoubtable Geoff Cooper knows that things are still fragile. The wider economic problems – from the USA to Greece – are not providing the sort of stable background that we need for sustained recovery.
The cuts in public sector work haven’t even begun to be felt yet so, with the public sector counting for about a fifth of Travis’s overall workload, it will be interesting to see if they can maintain the sort of performance that made my toast go cold on Monday.
Still, Cooper seems pretty sure that consolidation in the sector will continue – any weakening of the market could see more fragile competitors putting up the For Sale sign and, as the FT seems pretty sure that Travis was in the race to buy Build Center until the last moment, the money for more acquisitions is probably still there.