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Travis Perkins cautious on year ahead

Builders’ merchant Travis Perkins said the challenging construction market “may begin to turn” later this year after the company maintained revenue and profits in 2012.

Group revenue was up 1.4 per cent to £4.84bn and adjusted profit before tax rose 1.1 per cent to £300m for the year ended 31 December 2012.

General merchanting was fairly flat, with specialist merchanting recording a 20 per cent increase to profits. The group said civils division Keyline “benefited from the failure of a major competitor”.

“The failure of the largest civils merchant brought some short-term benefit to Keyline as both customers and suppliers sought to put more business our way,” it said.

The group said the performance of its markets in 2013 may begin to turn, but added “it will be mainly through our own endeavours to outperform our competition and manage our operating margin that the group will be driven forward”.

It expects overall volumes to be down on 2012.

Travis Perkins said it made good progress in 2012 despite a challenging construction industry “resulting from a combination of continuing economic uncertainty, the wettest weather conditions in living memory, continued reductions in public sector activity and weak consumer confidence”.

Chief executive Geoff Cooper said: “Whilst there are indications, for the first time in a while, that growth will return to our markets later this year, we anticipate volatile conditions will persist in the short term, further troubling weaker operators.

“A gradual recovery in our markets, together with targeted like-for-like volume outperformance and tight control of costs should deliver an expansion of our operating margins.”

The second quarter should be stronger, “mainly due to a relatively weak comparator in 2012 and potential recovery from low activity levels expected in first three months of this year”.

However, it said it is more optimistic about the second half of the year, when it expects a rise in mortgage and housing transactions to feed through, along with a government boost to public sector spend announced at the autumn statement.

Profit before tax after exceptional items was up 16.2 per cent to £313m, including adjustments of £40m after the Toolstation acquisition, along with £15m of integration costs after ot bought BSS.

The supplier said its BSS synergy target had been achieved with the integration programme nearly complete, while Toolstation has expanded to 123 branches and the Toolstation Europe trial launched in the Netherlands.

The firm also acquired the renewable energy distribution specialists, Solfex Energy Systems, earlier this year.

The builders’ merchant also reduced debt by £155m to £452m. Full year dividend of 25p per share up 25 per cent.

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