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Travis Perkins stocks up ahead of price hikes

Travis Perkins has started to stockpile heating and ventilation units, as well as radiators, ahead of expected price increases from its European suppliers.

Increases in the price of steel and copper are expected to add upward pressure to prices and the company has acted early to avoid having to pay more in the future.

Travis Perkins finance director Paul Hampden-Smith said: “Higher steel prices are pushing up the cost of radiators and heating and ventilation equipment so we have ordered more ahead of the expected increase.”

Travis Perkins also revealed last week that imperilled social housing group Connaught owes it a significant sum of money but that it had placed no pressure on the group, other than enforcing payment terms originally agreed between both parties.

Discussions over the amount owed are taking place but are confidential. Mr Hampden-Smith said: “We have significant exposure as they are a large customer.”

It unveiled a positive set of interim results, with revenue up 4.7 per cent to £1.5 billion in the six months to 30 June. Revenue in the same period of 2009 was £1.45bn.

The firm managed to increase adjusted pre tax profits by 23.7 per cent to £111.8 million in 2010, compared with £90.4m in 2009.

This comes after Travis Perkins chief executive Geoff Cooper’s comments that the merchanting market has improved from being “appalling” at this point in 2009 to only “miserable” at present.

In a measure of how the housing market is performing, strong sales to customers in the first quarter of the year were driven by stronger demand from house buyers and re-stocking of inventories by housebuilders.

The situation changed in the second quarter as demand from re-stocking declined alongside a slowdown in the housing market generally.

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