Building materials distributor Travis Perkins (TPK) fell 2.5% to £14.26 despite returning to profit in 2021 amid booming housing and home renovation markets.
Investors focused instead on the inflationary pressures and supply chain issues faced by the business as well as the risks to the outlook posed by a UK cost of living crisis.
Travis Perkins saw raw material costs up a relatively modest 4% in the first half of 2021 but 13% in the second half.
Group sales for the year hit £4.6 billion, up from £3.7 billion, with pre-tax profit of £305.6 million compared with a loss of £20.3 million in 2020. The company reinstated its final dividend at 38p per share.
FOCUS ON CASH AND SHAREHOLDER RETURNS
The business also streamlined its operations during the year, offloading its Wickes (WIX) chain through a demerger and selling its plumbing and heating arm, with the remainder of the proceeds from this sale currently being returned to shareholders a share buyback after the earlier payment of a special dividend.
Davy analyst Flor O’Donoghue commented: ‘2021 was a transformational year for Travis Perkins with the demerger of Wickes and the sale of the plumbing & heating business. Results for the year are characterised, as expected, by a significant rebound in the profits of the continuing operations.
‘With its strategy unlikely to feature inorganic investment of any real materiality, a focus of Travis Perkins is to generate cash and return capital to shareholders.’
