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.
Margin gains offset market pressure
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.
Cash position and property proceeds improve
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 may pursue selective property disposals or estate consolidation where locations are less important for delivered products, but ruled out widespread sale-and-leaseback transactions involving its best sites. Cooper said the company does not need such transactions to raise cash and believes they would be value-destructive over the medium term.
Business-unit priorities
Chief Executive Gavin Slark said the Green and Gold general merchanting business delivered a mid- to high-single-digit percentage profit improvement in the first half. The business is benefiting from margin improvement, fleet renewal, branch investment, a streamlined management structure and early procurement collaboration with Toolstation.
Toolstation U.K. performed in line with expectations and had more than 900,000 Toolstation Club members. Slark said club members typically spend more, have larger baskets and generate more attractive margins. The company plans to expand the Toolstation estate from 590 stores toward 650 over the next three years, including additional Toolstation Go locations in London.
The strategic review of Toolstation Benelux has been completed, and the company said it is in discussions with several third parties regarding the operation’s future ownership and status. Slark said the process was active and commercially sensitive, without providing a timetable for a potential transaction.
Elsewhere, BSS is targeting growth in private-label products, commercial and infrastructure markets, and commercial air-source heat pumps. Keyline is seeking opportunities in utilities, infrastructure and data centers as residential new-build demand remains weak. CCF’s performance deteriorated from last year amid its exposure to residential high-rise construction in the Southeast, and management is reviewing its branch network, logistics and supply chain.
TF Solutions, the group’s air conditioning and refrigeration business, benefited from favorable recent weather conditions. Slark said July was a record month for air-conditioning sales, and the company plans to open its first TF Solutions branch in Dublin during the first half of next year.
Outlook
Travis Perkins expects market conditions in the second half to remain similar to those seen in the first six months and therefore anticipates a similar trading performance. Cooper said the company expects a 28% effective tax rate on U.K.-generated profits and full-year property profits of about £5 million, noting that this amount had already been achieved in the first half.
Slark said the company’s stronger balance sheet provides flexibility and resilience while it continues to pursue operational efficiencies, productivity improvements, better supply-chain management and disciplined capital allocation.
About Travis Perkins (LON:TPK)
Travis Perkins plc engages in distribution of building material products in the United Kingdom. It operates through Merchanting and Toolstation segments. The company offers tools and building supplies. It also distributes pipeline products, as well as supplies managed services, and commercial and industrial heating and cooling solutions. In addition, the company provides in specialist civils and drainage solutions; and air-conditioning and refrigeration products and heat pumps. Further, it provides insulation and interior building products to interior building specialists, contractors, and builders; and kitchens and joinery products.
