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Travis Perkins outperforms the market again

Builders merchant group Travis Perkins has seen group revenue jump 8% with growth across all its business sectors, according to its latest set of results, published today.

Travis Perkins outperforms the market again

Revenue for the year ending December 31 2010 was £3,153m, up 5% on a like-for-like basis, while adjusted pre-tax profits leaped 20%, though operating margins were 7.8%, up just 0.1%.

Operating profit was £239m, up 6.4% from £224.6m a year ago.

The merchanting division saw revenues rise to £2.1bn from£1.95bn, while the retailing division – Wickes and Tile Giant – saw sales rise to £1bn from £980m. The group’s third division – BSS Group was only acquired on December 14 2010.

Sales from new merchanting branch openings contributed 0.7% of the growth, with like-for-like sales rising 7.3%. Of this, 3.6% was accounted for by of price inflation, the rest by volume increases. Within the merchanting division, the general merchanting branches saw sales up by 6.7% and specialist merchanting by 8.5%.

Despite the fact that all retail markets were tough in 2010, the retail division

outperformed its market by around 6%. Total sales were up by 2.3% to £1,003m (2009: £981m), with sales from new branch openings contributing 2.1%. A 3.3% sales increase from price inflation was offset by a 3.1% volume decrease , so like-for-like sales were only up 0.2%. Kitchen and bathroom sales were ahead by 9.5%.

The group reports that 2011 has started the year well with like-for-like sales in January up 22% in merchanting, 8% up in BSS and 12% in Retail on a delivered basis (Wickes core up 12%, kitchen and bathroom up 15%), reflecting the weak comparatives from the snow affected January last year.

The first 3 weeks of February have also traded well with a 10% increase in

like-for-like sales in merchanting, 5% in BSS and a 2% increase in Retail on a delivered basis (Wickes core up 3%, kitchens and bathrooms down 2%).

In January, Wickes’ kitchen and bathroom orders were down 3% and in February they were down 36%. This reflects a combination of pre-VAT increase advanced ordering in late 2010, rather than early 2011, and recent competitor discounting. In this weak K&B market our K&B gross margins are ahead of 2009.

Despite this, the group expects conditions for the next 12 months to remain difficult.

“There is considerable gloom in the wider economy, but we do not subscribe to the double-dip theory. The merchanting market fell by over 30% from its peak in 2008 and although activity has picked up a little, from a longer term perspective, activity levels are currently around 20% below their peak. Although we will probably see some turbulence in short term trends, we expect activity levels to continue their gradual recovery. In contrast, we expect the retail market to continue to be soft.”

Geoff Cooper, chief executive, said: “The Group made excellent progress in 2010, a year in which our organic development strategy, against a background of depressed levels of construction activity, produced a strong financial performance. The Group achieved further market share gains and impressive increases in profits. The Group’s strategic position and prospects in the UK have been considerably strengthened through the recent completion of the BSS.

“Our three main targets for 2011 are to drive organic growth, drive cash generation and to integrate BSS to get the best out of the acquisition. We have made a strong start to 2011 and consequently we look forward to another year of good progress.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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