Buoyant trading conditions and rising product prices (including for timber) gave a healthy boost to Travis Perkins‘ first half performance, with profits and sales both growing strongly.
The company’s interim results showed operating earnings up 12% at £156m and pre-tax profits 6.5% ahead at £129m. Turnover increased 12.3% to £1.58bn.
Chief executive Geoff Cooper described the six months figure as “strong” and said the company was set for “further financial progress in the second half”. “We’ve driven revenue gains and cost savings through our best practice programme and continue to gain like for like and total market share in trade and retail divisions”.
Chief operating officer John Carter said that there wasn’t a “sick child” across the group’s various divisions, which include Wickes, CCF and City Plumbing. “Seven out of nine of our businesses are sector leading in return on sales,” he said. “City Plumbing and our trade joinery brand Benchmarx have lagged behind, but they’re catching up.”
A further 32 branches were added to the group (mostly TP and Wickes outlets) in the six months and it expects to have another 45 by the end of the financial year, taking the total to 1,100. The Benchmarx business, which already has sales of £10m, is expected to grow to 20 branches in 2007.
Timber shortages have proved a headache for the business and it predicted that these would drive up winter prices another 5%. “But we’re now looking at importing from Canada, which is turning to the European market because of the downturn in the US housing sector, and that might also help soften price increases,” said Mr Cooper.
The company now detects the beginnings of a loss of consumer confidence, but said its strategies to cut costs and make it one of the most competitive operators in the market in the last two years left it well placed to weather any slowdown.
“A study has shown that our main competitors do not like to set up new outlets near our branches,” said Mr Cooper. “We’re very difficult to open against.”
Future growth, he added, would also depend on getting sustainability and environmental strategies right.
“Managing environmental concerns is going to be a bigger issue than anyone ever thought,” he said. “And this isn’t going to go away, whether you buy the global warming message or not.”
Underlining TP’s focus on this area, it has opened its first ‘renewable energy centre’, selling such products as solar energy and air source heat pumps, in Chelmsford, with plans for more.
