Travis Perkins posts profits rise but urges gov't to invest
CEO Geoff Cooper said the government should do more to boost construction sector
By CFOWorld staff | CFO UK | Published 13:35, 26 July 12
Travis Perkins posted a rise in half year profit but called on the government to help the construction sector, which is suffering the most in the most severe double dip the UK has face in the last 50 years.
The 1,887-branch building materials distribution group, made an underlying pre-tax profit of £137 million in the six months to 30 June on revenue up 2.7 percent to £2.41 billion.
The government is under pressure to boost growth after data on Wednesday showed the economy shrank far more than expected in the second quarter, battered by everything from an extra public holiday to the euro zone crisis.
Travis Perkins chief executive Geoff Cooper welcomed last week's government initiative to stand behind up to £40 billion pounds worth of stalled infrastructure projects struggling for funding.
But he said the government should be doing more, given that construction accounts for nearly 10 percent of gross domestic product, by spending money on shovel-ready projects that would have a big multiplier effect on the overall economy.
"What we would wish the government to do is stop spending bad money on current expenditure (waste and inefficiencies) and spend good money on capital items," Cooper told Reuters.
"They've done a few things but I think we would want to press them even harder to go further in that direction."
The CEO said latent demand in the group’s markets was increasing because many projects were being scaled back or deferred until lead indicators showed that prospects were improving.
Shares in Travis Perkins rose 0.2 percent after the firm posted a 7.3 percent rise in half year profit, though the outcome was held back by record rainfall in the April-June period which disrupted activity at building sites, costing it £10 million of profit.
Sales at branches open over a year fell 0.7 percent and were down 2.7 percent in July.
But the company has continued to grow gross margin and gain like-for-like market share in all of its four divisions - general merchanting, specialist merchanting, plumbing and heating, and consumer - and manage costs tightly.
Travis Perkins, which also trades as City Plumbing, Keyline, Tile Giant, Wickes and BSS, raised its interim dividend 23 percent to 8 pence and said it was confident of outperforming its overall market for the rest of the year and happy with full year consensus expectations.
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