Travis Perkins tentatively eyes market pick-up

Building materials group Travis Perkins boosted annual revenue and profit, despite continued headwinds in construction markets, and underlined its confidence in future trading by lifting its dividend payment by a quarter.

Pre-tax profit rose 16.2% to £313.3m for the year ended December 31st 2012 while group revenue climbed 1.4% to £4.84bn during the period. On a like-for-like basis revenue was down 1.4%.

The Northampton based builders' merchant said a full year dividend of 25p has been offered, up 25% from last time. Adjusted operating margins have remained at 6.7%.

Chief Executive Geoff Cooper commented: "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."

However despite continued tough conditions in construction markets, Travis Perkins said it has made good progress with strong cash generation and development of its networks and services in the UK and the launch of a small scale trial in continental Europe.

The company said it has continued with tight cost control, with lfl overheads down 2.3%. It reported an underlying £155m debt reduction, with net debt down to £452m.

"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," Cooper added.

"The group has an excellent track record of deploying self-help initiatives to achieve these goals, and our position as the UK's leader in building materials strengthens our position and prospects."

CJ