Travis Perkins looks for an improvement

Pre-tax profits slipped 11.1 per cent to 180m in 2009, but Travis Perkins said it coped well in the recession as activity in the builders' merchant market fell 30 per cent from its peak in late 2008 to its low point in mid-2009.

The decline in retail was softer – about 15 per cent until the first quarter of 2009 – as low interest rates and other stimulus measures boosted consumer demand.

Travis, which has 1,200 branches under brands including Wickes, Tile Giant and Keyline, said its markets had since stabilised but conditions were still blighted by short-term volatility, intense competition and business failures.

It added: "At this stage there is no clear indication of when our markets might return to growth again.

"Although we believe this might be evident by the end of 2010, we are also wary of the probable false starts that we expect to see."

The company lowered its cost base by 60m in the year, including actions linked to a reduction in headcount.

Group revenues fell by 247.7m to 2.93bn in the period, reflecting a drop of 8.6 per cent in like-for-like sales over the year.

In the Travis Perkins merchanting division, the same-store figure was down 13.5 per cent after a 17.1 per cent drop in volumes and price inflation of 3.6 per cent.

It conceded that independent merchants, who traditionally accept lower operating margins, may have increased their market share in the period.

However, Travis added: "We judge our trading stance in the recession to have been successful, particularly when compared to the operating profit and margin trends of most competitors."

Retail division sales were up by 4.3 per cent to 980.7m with sales from new branches contributing 1.2 per cent and like-for-like sales increasing by 3.2 per cent

This reflected higher prices and a 0.6 per cent volume improvement as kitchen and bathroom sales benefited from the demise of MFI in late 2008.

In the first seven weeks of the current financial year, Travis said like-for-like sales were down 2.8 per cent in merchanting and by 2.4 per cent in retail.

"While our markets are no longer exhibiting the abrupt declines in volume that characterised the start of the recession, activity levels remain fragile," said chief executive Geoff Cooper.

In a statement to accompany the results, he added: "Management has taken decisive and resolute action to deal with the impact of the downturn and in doing so has maintained Travis Perkins as one of the strongest operators in the sector. Our core strengths have been retained while costs have been reduced. Our profitability, although lower than in pre-recession conditions, compares well with our competitors.

"Having managed effectively through the recession the group's strategy is to focus on organic growth in this low growth environment. Our stable and experienced management team has a proven track record of driving organic growth in these market conditions."

Shares in Travis Perkins have more than trebled over the last year.

Company with a long history

Travis Perkins can trace its roots back to 1797 when The Benjamin Ingram company was founded at 33 Beech Street, in the City of London, where it traded as joiners and carpenters.

In 1899, Travis & Arnold formed as a partnership. Five years later, Travis & Arnold moved to Northampton and opened a number of branches in the Midlands as a merchant of timber and other wood products.

In 1988, Travis & Arnold and Sandell Perkins merged to become Travis Perkins.

Four years ago, Travis Perkins added 30 branches to its network, through a combination of acquisitions and brownfield sites.

In 2007, it added another 25 branches, including two specialist timber businesses, Four Oaks Timber and Shires Timber, ending the year with 581 locations.