Travis Perkins in UK raises prospects for strong construction market rebound

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Signage is pictured at Travis Perkins, a lumber and construction yard in St Albans, Britain October 22, 2020. REUTERS / Paul Childs

  • Raises profit outlook for fiscal 21 by 3% to 310 million stg
  • Declares a special dividend of 35p per share
  • Guide lift leaves conservative H2 – Jefferies

Aug 3 (Reuters) – UK building materials supplier Travis Perkins (TPK.L) raised earnings expectations as pent-up demand after last year’s pandemic disruptions drives the market to a strong rebound, but he has always taken a cautious stance due to the virus uncertainties.

Its chief financial officer, Alan Williams, told Reuters that the company, the country’s largest building materials seller, would focus more on its division which sells materials such as lumber and sand to building material dealers.

“I expect revenue growth to continue and what has driven it are the repair and maintenance improvements that are part of the market,” Williams told Reuters.

The comments come after the mid-cap company, which currently has three other specialty divisions, split from its home improvement business Wickes (WIX.L) and sold its plumbing and heating division earlier this year.

Britain’s construction industry recorded its fastest growth in 24 years in June, supported by a surge in demand for new homes and commercial properties. Read more

The group is now forecasting at least 310 million pounds ($ 430.87 million) in adjusted annual operating income from continuing operations, up from at least 300 million pounds forecast in June.

‘A PRUDENT OPTIMISM’

Jefferies analysts, however, said the upturn in outlook leaves a conservative second half. The shares were trading down about 2.6%.

“I am cautiously optimistic about the outlook for the company,” Managing Director Nick Roberts said in a statement.

Travis announced a special dividend of 35p per share, which is part of £ 325million in proceeds from the sale of its plumbing and heating business, while the rest of the consideration will be returned to shareholders via a buyback scheme actions later.

It said revenue of 2.30 billion pounds and adjusted operating profit of 164 million pounds for the six-month period ended June 30, compared to the weak base affected by the pandemic in 2020 of 1, 67 billion pounds and 17 million pounds, respectively.

Williams said the company had “largely managed” the supply chain disruptions resulting from the pandemic and was able to offset the impacts of inflation.

($ 1 = 0.7195 pounds)

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Peter Graff

Our Standards: Thomson Reuters Trust Principles.

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