Travis Perkins H1 Earnings Call Highlights

Travis Perkins LON: TPK reported a modest decline in first-half revenue as challenging construction markets continued to weigh on volumes, while higher gross margins, cost discipline and property receipts supported profit and cash generation. Revenue totaled £2.258 billion, down 1.8% from the prior year, including the impact of the previous sale of the Staircraft business. On a like-for-like basis, turnover declined 0.7%. Adjusted operating profit before property profits was unchanged year over year at £62 million, while adjusted operating profit including property profits increased 6.3% to £67 million.

Chief Financial Officer Duncan Cooper said adjusted earnings per share rose 13.5% to 15.1 pence, aided by the timing of property profits in the first half and lower finance costs as the company held higher cash balances on deposit. The board recommended an interim dividend of 4 pence per share, payable Nov. 6.

Gross margin improved by 100 basis points during the half. Cooper said the expansion reflected a focus on passing through supplier price increases, avoiding unnecessary discounting, shifting sales toward higher-margin yard transactions, and improving procurement practices. The company said it had harmonized purchasing terms across the group, stopped buying from direct competitors and removed nearly one-fifth of its tail merchanting suppliers. Cooper said management sees further opportunity to professionalize purchasing, including through greater use of its Far East Sourcing Office.

Travis Perkins said the trading environment remained difficult. Poor weather affected construction output in January and February, repair, maintenance and improvement activity remained sensitive to consumer confidence, and new housebuilding activity had stalled. Infrastructure demand was described as relatively stronger but uneven. Cooper said pricing became particularly important amid cost inflation and manufacturer price increases linked to the Iran war, including increases of 15% to 20% on some oil-based plastic products. The company expects a further wave of increases in the second half and into the first half of next year as hedges on natural gas and oil roll off elsewhere in the supply chain. The group said it was generally succeeding in passing increases through, though the effect on demand remained difficult to assess. It has also been walking away from low-margin or loss-making transactions and closely monitoring credit limits and overdue debt, citing nearly 4,000 U.K. construction firm insolvencies in the year to April 2026.

Net cash before leases was £55 million at the half-year point, compared with net debt of £103 million a year earlier and net cash of £1 million at the prior year-end. The £158 million year-over-year improvement returned leverage to 1.9 times net debt to adjusted EBITDA, within the company’s target range of 1.5 to two times for the first time since 2022. Cooper attributed the progress to continued attention on working capital, supplier terms, debt collection and disciplined capital spending. The company expects annual base capital expenditure of £60 million to £70 million, with almost half directed toward renewing its fleet. Other investment will focus on merchanting branches, Toolstation store openings and maintenance work such as roof repairs, yard resurfacing and colleague facilities.

Travis Perkins generated £70 million of net property receipts in the first half, primarily from the sale of closed merchanting sites and surplus development land. The company closed 10 merchanting branches, mainly Benchmarx or managed-service locations in rural communities where extending leases or investing in refurbishment was not economically attractive. Management said it...