The UK’s largest builders’ merchant Travis Perkins (TPK) is up 1.9% to £15 as it delivers a 4.1% increase in like-for-like sales in the quarter to 30 September. The shares are paring earlier more significant gains and this could reflect the fact the sales growth largely reflects price increases and a favourable comparative trading period.

The company boosted its prices by 3.9% in the third quarter compared to 3.4% in the year to date, passing on the impact of volatile currency movements and increases in commodity prices such as timber and copper.

While noting sales growth beat his estimate of 1.4%, UBS analyst Gregor Kuglitsch says volumes were flat and virtually all growth was driven by price inflation, which ‘does not material enhance profitability.’

Travis Perkins

SLOWER GROWTH AT WICKES

Nearly all the firm’s businesses delivered strong like-for-like growth, with the exception of its consumer division, where expansion slowed to 2.4% due to a subdued performance from its DIY retail chain Wickes.

The plumbing & heating arm is notably performing better than expected, bouncing back from a tough 2016 which saw revenue decline 0.9% and profit fall more than 15%. Sales here were up more than 5.4% in the third quarter.

Canaccord Genuity’s Aynsley Lammin notes the cautious outlook for full year results, with like-for-like sales ‘expected to be flat at this stage, with higher prices offsetting lower volumes.’

Travis Perkins currently trades on a forecast 12.1 earnings per share in the year to 31 December 2018.


Issue Date: 19 Oct 2017