Firm foundations help building supplier to weather a damp start

The largest supplier of building materials in the UK said group revenues were ahead 4.4 per cent in the four months to the end of April, as growth in its general and specialist merchanting divisions were offset by declines in plumbing and heating and retail.

The retail division, which includes 200 Wickes and 107 Tile Giant stores, saw like-for-like sales in the period drop 5.2 per cent.

The Northampton-based group said after a good first quarter, the wettest April since records began led to a weaker performance, while the weather continued to hit activity in May.

Geoff Cooper, Travis Perkins chief executive, said: “We are pleased with the good progress in the first quarter, in particular the balance between continued share gains and our achievements on gross margins.”

The group earlier this year announced a £24m deal to buy the 70 per cent of the 100-store strong retailer ToolStation that it does not already own.

It said it was surprised that the Office of Fair Trading had raised concerns about the proposed acquisition because its agreement with the Bridgwater, Somerset-based business had created a robust competitor.

Shares were 4 per cent lower after yesterday’s update.

Nick Bubb, independent retail analyst, said the consumer arm had “a tough time” but the core trade business had done well and was overall on track so far this year.

The integration of plumbing and heating business BSS, which was taken over in 2010 continues, Travis Perkins said, as it rolls out new branch trading systems.

Charlie Campbell, an analyst at Liberum Capital, described the trading update as “rather lacklustre” but maintained his ‘hold’ recommendation.

He said the shares are “quite cheap” although the market is “struggling to get much enthusiasm given [the] poor UK economy”.

He added that Wolseley has “a much better story... where self-help is more significant and the US is a growth engine”.

But Jon Bell at Shore Capital sticks with his recommendation to “buy” shares in Travis Perkins.

He said: “Management continues to expect market expectations for the full year to be met, debt reductions remain on target, margins – where greater focus is being made – are being held and the integration of BSS continues to progress well.”

The group has more than 600 branches in the UK, including 34 in and around Yorkshire.