Travis chief calls for a radical approach to get country moving

The Government needs some radical thinking to get the economy moving, the boss of the country’s biggest supplier of building materials, Travis Perkins, said yesterday.

“The trouble at the moment is that people are thinking of conventional solutions and I’m afraid we’re not in conventional economic times, so we’ve got to think more radically to get some of these markets moving,” chief executive Geoff Cooper said.

He called on Chancellor George Osborne to cut VAT sales tax on home improvement products, particularly for renewable building projects, in the March 20 budget statement.

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“There’s a lot of evidence to show that if you increase economic activity in construction, you get a boost to the economy overall because most of the product is domestically derived and it’s domestic activity,” Mr Cooper said.

The Bank of England has predicted a slow economic recovery over the next three years after two years of stagnation because of a mix of eurozone turmoil, government austerity and subdued consumer spending.

Mr Cooper also wants the Government to boost the housing market by extending its Funding for Lending scheme, cutting stamp duty and bringing back tax relief for first-time buyers.

He was speaking after Travis Perkins met forecasts by posting a 2.1 per cent rise in 2012 earn- ings.

However, 2013 has got off to a slow start, with sales at branches open for more than a year down 5.1 per cent in the first seven weeks of the year.

Mr Cooper expects volatile conditions to persist in the first half but is more optimistic about the second half, anticipating a pick-up in housing transactions and some benefit from government infrastructure programmes.

He 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.”

Though the company expects overall market volumes for 2013 to be lower than 2012, it said that the rate of decrease is likely to be smaller, at 1-2 per cent. Though both construction and consumer markets have been weak during the economic downturn, Travis Perkins has performed relatively well, winning market share and benefiting from the synergies provided by its 2010 purchase of plumbing and heating company BSS.

The group, which includes the City Plumbing, Keyline, Tile Giant, Toolstation and Wickes brands, made adjusted earnings per share of 95.1p in 2012 – in line with analysts’ forecasts and up 2.1 per cent from the 93.1p achieved in 2011.

Underlying pre-tax profit was up 1.1 per cent at £300m on revenue 1.4 per cent higher at £4.85bn. Like-for-like sales were down 1.4 per cent. The company, which cut net debt by £155m to £452m, is increasing the full-year dividend by 25 per cent to 25p.

“These results show the quality of Travis Perkins, as it has delivered a steady performance in what remain tough markets,” Panmure Gordon analyst Andy Brown said.

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.