Travis Perkins shares jumped on Tuesday after the company reported a resilient first half and a much-strengthened balance sheet, as its new chief executive’s turnaround of the building materials group began to show early signs of progress.
Revenue slipped 1.8% to £2,258m, as weaker volumes in a tough market and last year’s disposal of Staircraft outweighed building materials price inflation.
However, adjusted operating profit rose 6.3% to £67m, helped by an £11m expansion in gross margin, while statutory operating profit climbed to £65m from £59m and profit after tax rose to £30m from £26m.
It was a small improvement for Travis Perkins, but there were signs of positivity across the financial statements, which helped shares jump 17% on Tuesday.
The clearest sign of progress was on the balance sheet: the group swung to net cash before leases of £55m, from £103m of net debt a year earlier, driven by tighter working-capital discipline and property disposals.
Much of the operational improvement came from the General Merchant business, where management passed on price inflation more effectively, leaned into higher-margin sales and secured better procurement terms.
Toolstation UK also traded well, growing revenue, margin and returns, with its loyalty scheme now 900,000 members strong. The picture was weaker in the Benelux, where Toolstation’s losses widened to £7m, and the group is in talks with potential buyers about selling the business.
Despite the improved profit, the board cut the interim dividend to 4.0p from 4.5p, which it said was in line with its policy of paying out 30% to 40% of adjusted earnings.
Chief executive Gavin Slark, who joined in January, said the group had built on last year’s operational progress with a new leadership team and a clearer set of priorities, and that its stronger financial position gave it the flexibility to invest ahead of any market recovery.
Travis Perkins expects second-half trading to be broadly similar to the first, with UK construction activity still depressed.