Builders merchant group Travis Perkins has announced falling sales and a drop in pre-tax profits of 11% for 2009.
Group revenue for the year ending December 31 2009 was 8% down at £2.9bn, revenue for the merchanting division fell 12% to £1.95bn and sales in the retail division up slightly at £980.7m.
Adjusted operating profit for the group was down 17% to £225m, with gross operating cost savings of £60m achieved ahead of target.
Like-for-like sales in the merchanting division fell by 13.5% and a reduction in trading days accounted for a further decline of 0.4%. Given the company’s policy of defending its margins, it estimates that both general and specialist merchanting operations recorded a like-for-like performance behind the market average – like-for-like sales in general merchanting fell by 14.1% and specialist merchanting by 12.6%.
Chief executive Geoff Cooper described the activity levels as “fragile” and said that trading conditions in 2009 had been “the most difficult in the group’s history”.
“Whilst our markets are no longer exhibiting the abrupt declines in volume that characterised the
start of the recession, activity levels remain fragile,” he said.
“We are concerned in particular about weak consumer spending trends in 2010 as inflation rises and the cushion of falling mortgage costs annualises out. We expect the home improvement market to contract further in 2010, but with only limited benefit from competitors going out of business in contrast to the large capacity reductions seen in 2009. Against this background, we expect pricing discipline to be maintained since returns for most operators remain at sub-economic levels. However, there is always a risk of sporadic price aggression from less disciplined operators.”
“The group, in comparison with competitors with a more narrow focus, has benefited from its breadth of business activities across these two segments of the building materials market.”
Looking forward, the group says it is prepared for a “long period of probable low growth and difficult trading conditions before we can anticipate a return to growth in our markets,” and although current conditions could be described as stable, there is no clear indication of when markets might return to growth again. “Although we believe this might be evident by the end of 2010, we are also wary of the probable ‘false starts’ that we expect to see.”