Travis Perkins‘ profits reduced 27% to £90m in the first half, which it described as ahead of expectations in testing market conditions.
The merchanting giant said annual cost savings of £60m, an operating margin of 8.1%, reduction of net debt to £527m and a decision to safeguard the number of its branches made it well-placed to continue to perform well and grow business in the longer term.
Travis Perkins estimated that 550 of its competitors’ branches had closed so far in the recession, representing nearly 5% of the merchant sector capacity. The group said it had closed only three branches this year.
For the six months ended June 30, group sales totalled £1.45bn, down 13% on a year ago.
Merchanting divisional turnover was down by 17.8% and pre-tax profits decreased 32.7% to £83.9m, with like-for-like turnover per trading day suffering a 18.5% reverse. Doors achieved a good uplift in sales due to centralisation of the products, resulting in greater availability.
It said its prediction, made at the outset of the recession, of a 25% reduction in volumes had proved accurate, though said the trough in merchanting would reach about 30%.
The company said DIY business had performed more strongly than originally predicted, while trade customers serving large new construction projects had suffered more than forecast.
“Whilst signs of stabilisation in some of our markets have been around for a few months now, there remain risks on the downside, although any further weakening of markets is likely to be gradual,” it said.
