UK builders’ merchants Travis Perkins plc has announced pre-tax profits of £125 million.

UK builders’ merchant Travis Perkins plc has announced pre-tax profits of £125 million against an economic background of weakening markets.

The Group serves a diverse range of construction activities, yet despite the negative flow of news and forecasts for UK housing, has made good progress for the six months to June 2008.

Revenue was up by 5.4% compared with the same period last year at £1.7 billion, while group operating profits rose by 0.2% to £156m with the Group’s operating margin at 9.3% against 9.8% for the last half-year.

Profit before tax declined by 3.2% to £125m, reflecting higher financing costs. Adjusted basic earnings per share increased by 3% to 74.4 pence reflecting both a lower effective tax rate and a weighted average 3.9% fewer shares in issue.

Geoff Cooper, Chief Executive, commented: “As we anticipated and observed in our last full year results statement, 2008 has become a more challenging market and we expect our markets to weaken further as the year progresses.

“We have continued to gain like-for-like market share in both our merchanting and retail divisions whilst preserving our gross margins and managing our costs in anticipation of a further contraction of our markets. Overall, our like-for-like sales rose by 0.8%.”

Travis Perkins also generated strong cash flow in the period, increasing their cash flow from operations – after out-flows associated with net replacement capital expenditure – by 19% to £212m.

The company also reduced its net debt from £941m at the previous year end to £911m at the end of June, and refinanced its UK bank debt, securing a new £1 billion, five year facility in April.

Finally, the group’s pension fund deficit jumped from £16m to £43m as a result of a weakening in investment values of the fund’s assets, but was cushioned by the rise in liability discount rates from 5.8% to 6.4%.