(Reuters) - Britain’s largest building materials distributor Travis Perkins (TPK.L) on Tuesday reported 2019 revenue that beat market expectations as growth at its home improvement unit Wickes helped it offset challenging market conditions.
The company, which is streamlining to focus primarily on its fast-growing trade business, said its planned demerger of Wickes was proceeding smoothly and that it expected it to be a standalone listed business in the second quarter of 2020.
“Against a challenging market backdrop we have delivered a strong operational and financial performance across the group,” Chief Executive Officer Nick Roberts said.
Britain’s construction industry had been hit by Brexit uncertainties for most of last year as Britons and institutions held back on committing to building homes and office blocks, in turn hampering demand for materials.
Like Travis Perkins, rival SIG (SHI.L) has focused on streamlining operations and cutting costs amid long-running weakness in European construction markets.
After the demerger of Wickes, Travis Perkins will be left with a business catering purely to building trade professionals, ranging from sole traders to national housebuilders.
Davy analysts said Travis Perkins’ 2019 results point to a step in the right direction thanks to cost savings, after challenges in the recent years.
Shares of the company rose as much as 4.4%, breaking a seven-day losing streak, after the annual results.
The UK Construction Purchasing Managers’ Index, a key measure for the building industry, turned positive for the first time in nearly a year in February as Prime Minister Boris Johnson’s election win boosted economic sentiment.
Travis Perkins, whose fortunes are closely tied to housing transactions and consumer confidence, said the outcome of Britain’s general election in December 2019 had resulted in an improvement in some of its near-term indicators.
The company, however, said it retained a cautious outlook, particularly as there was a natural lag between increasing housing transactions and consumer confidence.
Travis Perkins reported annual turnover of 6.96 billion pounds, just above analysts’ average expectation of 6.94 billion pounds, according to I/B/E/S data from Refinitiv.
The company, which recently sold its wholesale plumbing and heating business, said adjusted operating profit rose to 442 million pounds for the full-year ended Dec. 31 from 410 million pounds a year earlier.
(This story corrects to remove reference to rising costs in paragraph 1)
Reporting by Samantha Machado; Additional reporting by Muvija M; Editing by Patrick Graham and David Evans