Travis Perkins wary despite strong start
24 February 2011 09:55
Travis Perkins has reported a jump in annual profits but admitted that activity in its core market remained 20% below its 2008 peak.
The builders' merchant, which operates more than 600 branches, said it expected a continuation of the gradual recovery in its merchanting division while demand at its Wickes DIY business is likely to remain weak.
Underlying profits climbed to £216.7 million in 2010, an increase of 20% on last year, with like-for-like sales up by 22% in January in merchanting, 12% in retail and by 8% at the BSS plumbing supplies business it acquired last year.
Sales in February have slipped but remain in positive territory.
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."
Commenting on the outlook, the company cautioned: "Despite starting the year well we expect 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."
The company concluded: "We are realistic about market prospects, but are positive about the future because we have the strategy, market position, execution skills and scale to respond quickly to market changes and to deliver outstanding service to our customers."
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