Travis Perkins expects H1 to beat expectations as the strong rebound continued

In an update on its H1 trading, the UK’s largest builders' merchant, Travis Perkins (LON:TPK) said the strong rebound, reported earlier this year, continued over the course of the whole six-month period and as a result the company now expects its H1 results to be ahead of management expectations.

For the period from 1 January to 30 June 2010, Travis Perkins now expects to report 4.7% year-on-year growth in group revenue, with like-for-like sales up 3.4%. Notably the company said that like-for-like turnover in the last two months was 10.3% ahead in Merchanting and, in the last 9 weeks, the retail business was 1.6% ahead.

The strong performance and the continued revenue growth has led to a decision to reinstate the dividend. “In the absence of unforeseen circumstances we expect to declare an interim dividend of 5 pence per share when we announce our interim results for the six months to 30 June 2010 on 29 July 2010.”
Travis Perkins noted that initially it will be basing the dividend off a conservative level of cover, and its objective is to grow the dividend ahead of earnings, to reduce the current level of cover over the medium term.

"We are pleased with the overall progress the group has made in the first six months of the year”, Travis Perkins CEO Geoff Cooper said. “Current trading continues to be ahead of management expectations and we now have the confidence to contemplate recommencing paying dividends. We expect to give an update on our discussions with The BSS Group shortly."

At the end of May, Travis Perkins announced it was in advanced discussions regarding a cash-and-share offer worth £553m for specialist trade distributor BSS Group (LSE: BTSM). According to Travis Perkins, the combination would create the UK’s leading plumbing and heating trade and retail distribution business.

Travis Perkins said, that for some time, it has believed that further consolidation in the UK building materials merchanting sector offers significant scale benefits in terms of cost savings and improved operational efficiency.

The £553 million offer values BSS at 433p per share, and consists of a 232.91p per share cash element and 0.2608 new Travis Perkins shares per BSS share.